Financial statements from Canadian-based First Quantum Minerals (FQM) show that Zambia’s largest miner was issued an arbitration award for its Kansanshi mine subsidiary in a case against national utility Zesco.
The arbitral award was made in November by a court in the United Kingdom, FQM revealed in its 2021 consolidated financial statements, published on 16 February.
Kansanshi is owned by FQM via Kansanshi Holdings, alongside 20% shareholder ZCCM Investments Holdings. In December, the tribunal awarded Kansanshi costs. FQM said it was “now engaged in pursing Zesco’s compliance with the tribunal’s orders”.
The dispute arose in June 2018, when FQM said Zesco reduced power supply to its mine without warning after its Kansanshi and Sentinel (which operates the Kalumbila mine) subsidiaries rejected a demand to pay higher tariffs. FQM said the new tariffs were “contrary to the existing contractual agreements.” Kansanshi sought an injunction in the UK later that month, which was awarded in early July 2018; Kansanshi launched the arbitration against Zesco that August (AE 353/9).
Despite the dispute, FQM said Kansanshi “generally maintain[s] a constructive relationship with Zesco, particularly with regards to the management of technical and supply issues.”
The arbitration is one of several FQM is fighting in Zambia. ZCCM filed an arbitration case against Kansanshi Holdings in October 2016, which was settled in FQM’s favour in July 2019. Court action in the case – which relates to interest paid on deposits in 2007 – continues, however, with ZCCM challenging the arbitral award. The case was appealed all the way to the Supreme Court, which dismissed it in January while reserving the decision.
FQM said Kansanshi Holdings had launched yet another arbitration in May 2020, this time against the government, at the World Bank Group’s International Centre for Settlement of International Disputes (Icsid). FQM said the arbitration was confidential and that the amount claimed had not yet been quantified but “is believed to be material.”
An adjudication of merits is expected to be heard at Icsid on 14-18 March, after documents and responses were submitted throughout 2021 and early 2022. A hearing is scheduled for January 2023.
