Glencore, First Quantum Zambia Units Urged to Increase Dividends

Zambia’s state-controlled ZCCM Investment Holdings wants local units of First Quantum Minerals Ltd. (FM) and Glencore Xstrata Plc (GLEN) to at least double dividend payouts, its chief executive officer said.

Glencore Xstrata’s Mopani Copper Mines Plc paid its first dividend in 10 years in 2012, and its “approach of retaining all the profits cannot go on,” ZCCM-IH CEO Mukela Muyunda said at a shareholders meeting today in Lusaka, the Zambian capital.

Africa’s biggest copper producer is seeking to boost revenue from its mining sector to help curb a widening budget deficit and pull its 14 million people out of poverty. Mines contribute 5 percent of the country’s revenue, while in surrounding southern African nations the figure is about 11 percent, Zambian Finance Minister Alexander Chikwandatold lawmakers last month.

Zambia-based spokesmen for Mopani and First Quantum didn’t immediately respond to e-mails seeking comment. ZCCM-IH, which is 86.7 percent owned by the Zambian government, holds 20 percent of Kansanshi and 10 percent of Mopani.

Mopani is resisting paying out bigger dividends “and we are hoping that our message to them can be clear,” Muyunda said. “We have engaged them at management level, at board level. The only thing we haven’t done is to beat them.”

First Quantum’s Kansanshi operation, Africa’s biggest copper mine, has a dividend payout ratio of 15 percent, which should be increased to “at least 30 percent,” he said.

The company is reviewing which stock exchange it should target for a share listing and will conclude this in 2014, Muyunda said. Minority investors in May called for the company to list on London’s Alternative Investment Market to increase liquidity and improve transparency. The company’s shares trade on the Lusaka Stock Exchange and the NYSE Euronext’s Marche Libre, an unregulated over-the-counter market.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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