Trafigura Seeks Arbitration Over $100 Million Copper Deal with ZCCM-IH
Global commodities trader Trafigura has filed for arbitration against Zambia’s state-owned ZCCM Investments Holdings Plc (ZCCM-IH) over a disputed $100 million copper prepayment agreement, initially signed in 2021.
The arbitration proceedings, filed under the London Court of International Arbitration Rules, stem from a guarantee signed by ZCCM-IH’s former CEO in favor of Trafigura. ZCCM-IH has confirmed it is contesting the claims.
In a statement to the Lusaka Securities Exchange, ZCCM-IH Company Secretary Charles Mjumphi explained that the guarantee was issued as security for a prepayment agreement between Trafigura and Konkola Copper Mines (KCM), a company in which ZCCM-IH holds shares.
“The arbitration proceedings follow a demand for payment made by Trafigura on November 21, 2023, pursuant to the guarantee,” said Mjumphi. “The guarantee was signed as security for a ZMW1.6 billion (US$100 million) prepayment deal between Trafigura and KCM.”
Mjumphi warned that the matter remains price-sensitive, urging ZCCM-IH shareholders and investors to exercise caution when trading company securities until further updates are provided.
KCM’s Financial Struggles and Liquidation
The dispute comes amid ongoing financial and operational challenges at Konkola Copper Mines (KCM), which led the Zambian government to place the mining firm under provisional liquidation.
ZCCM-IH, as a minority shareholder in KCM, filed a petition for compulsory liquidation in May 2019 under Zambia’s Corporate Insolvency Act of 2017. Since then, a court-appointed provisional liquidator has been overseeing KCM’s operations to protect its assets and ensure business continuity.
One of the key challenges facing KCM has been the stalled development of the Konkola Deep Mining Project (KDMP), which forced the company to rely on third-party copper concentrates to sustain smelting operations.
To secure working capital, the provisional liquidator sought financial backing, leading to the 2021 prepayment deal with Trafigura. Under the agreement, Trafigura paid KCM $100 million upfront, with KCM agreeing to repay the amount through copper deliveries. ZCCM-IH backed the deal with a guarantee, which is now at the center of the arbitration case.
Source: Makanday
