Africa Copper Finance Government Mining Zambia

Zambia’s State Investments Holdings aiming for new strategic mining plan

After two years of executing a 5-year strategic plan, ZCCM IH’s board has made the bold decision to change its strategic course towards a more impactful undertaking that will see the investment group focus on mining, according to the Board Chairperson in his message to shareholders.

“Two years into our 2018-2023 Strategic Plan we have undertaken further strategic introspection which culminated into a strategic revision process. This led to the development of a new strategic plan as it became imperative that the change in strategic focus required a complete overhaul of the 2018-2023 strategic plan”, read an extract from Chairman Eric Silwamba from the new Strategic Plan which was recently released in January 2021.

“This was necessitated by the changing business environment that calls for us to remain impactful, maximize shareholder value and drive growth largely in the mining industry in which we are deeply associated as an entity”.

According to CEO Mabvuto Chipata, “this new strategic plan (the “2020-2026 Strategic Plan” or the “Strategic Plan”) has been motivated by the need for ZCCM-IH to re-focus its investments in mining and the mining value chain”.

Also read: Zambia to be energy secure this year: official

It is this strategic intent that led to the acquisition of a majority stake and retain ownership of Mopani Copper Mines in which the investment group had until recently been a minority shareholder. This is in line with the executive summary of the strategic report that states “focus for ZCCM-IH in this new strategic plan is directed to mining and mining-related investments, and emphasises the need for ZCCM-IH to drive the development and growth of the mining sector in Zambia”.

Much as it normally pays to have a small chunk of a larger cake than a large chunk of small one, ZCCM IH is also positioning itself to address the inequities that come with being a minority shareholder. The Achilles heel of being a minority shareholder resulted in the investment group having limited ability to influence operational and strategic direction for investees. What this means is that representation in these companies is not impactful as it does not constitute a sizable vote when it comes to decisions being made that influence return on investment.

In short, Board representatives can make statements, but majority rule dictates the level of anxiety for pursuing shareholder interests. Therefore, the remedy to this is majority or significant minority shareholding.


Financial Insight Zambia

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