Vedanta Resources PLC Chief Executive Officer MS Mehta has confirmed the company’s commitment to Zambia and that it’s working with all stakeholders, including the Zambian government to resolve tensions over a proposal to layoff around 1,500 workers at KCM.
KCM, Vedanta’s majority-owned Zambian copper unit on November 5 announced plans to cut 1,500 jobs as part of a plan to turn around the operations and make them more cost competitive, in part by mechanizing operations.
The Zambian government responded to the proposed layoffs by threatening to revoke the company’s license if it goes ahead.
The Zambian government also cancelled the working permit of KCM’s CEO Kishore Kumar.
Mr M.S. Mehta said in a conference call on Friday after the group published interim results.
Mr. MS Mehta said there was miscommunication and the company remains committed to engaging with stakeholders, including the government of Zambia, to make sure these assets deliver to their full potential.
Vedanta has invested $2.8 billion in Zambia over the past nine years, but its current productivity is only eight tons an employee, compared with global benchmarks of 100 tons an employee.
Vedanta Chairman Anil Agarwal sought to diffuse tension by saying that no decision has been taken to dismiss any employees and the proposed redundancies, if they go ahead, would take place over a couple of years.
Mr. Agarwal noted that KCM employs about 18,000 workers in Zambia.
Mr. Mehta reaffirmed that the company plans to produce 140,000 tons of copper from its Zambian operations at a cash cost of $2.20 a pound in the fiscal year ending March 31, 2014.
He expects the company will be able to reduce its cash cost to $2.20 next year as it continues to ramp up output from its Zambian operations.
Vedanta wants to expand its Zambian copper production capacity to 400,000 tons a year.
KCM, produced 65,000 tons of copper in the first half of the current fiscal year ending March 31, 2014, down 22% on year, while cash costs inched slightly higher.
The Zambia copper division accounted for 4.5% of the group’s total earnings before interest, taxes, depreciation and amortization during that period.
Tell them., osa @ RHETORIC #Via talk talk to Tummy.
Ati KCM’s production level stands at 8 tonnes per employee compared to a global benchmark of 100 tonnes per miner. But 100 tonnes of what grade of copper, and under what mining conditions? KCM is one of the world’s wettest mines with about 15% of mining costs consisting of dewatering operations. Of course The KCM operation should be financially viable to Vedanta, but let them not hide facts in MERE statistics lest it sound like some MERE RHTORIC.
Sorry, I meant “… RHETORIC”
The Zambia copper division accounted for 4.5% of the group’s total earnings before interest, taxes, depreciation and amortization during that period.
So what u are saying Zambian wealth contribution is insignificant ? Then leave our country we can do the mining by ourselves
KCM sounds like a community-social project and not a commercial company. Its like if passing mark is 100 points, and you only get 8 points… Sounds the classrooms/departments are over crowded.
The matter of miscommunication should not have arisen considering that the PS in the MOM is a member of the KCM Board of Directors. If the Board voted in favour of the lay off (with a government representative not objecting) then government effectively sanctioned the process. The agenda and documentation for a Board meeting are sent to member days ahead of a meeting. The onus was on the government rep to read and discuss with the Minister critical matters prior to the Board meeting. It looks here like the PS was only interested in his next Board allowance.
Bikiloni would say, ” malabishi”
Wow ! Now this is a win-win situation for both sides.I bet the government needs to be commended for forcing KCM to delay the laying off process(Am sure the tomorrow clarification wasn’t in their initial laying off plans).KCM also needs a pat on the back for this well thought out and gradual laying off process that will see them making more dollars at the end of the day.Talk about seasoned capitalists.Awesome !!!!
have to agree with you on this one son. In the end, it all turned out cool and I am forced to commend the government even though the approach was crude, it was effective.
Well said gentleman.
MC Mehta, it is ether you think that you are dealing with clueless politicians who do not have think tanks such as sound experienced economists or, may be you have taken advantage of Zambians who seem to be docile and subservient to you.
Allow me to unpack your seemingly vague above suggestions masked in the name of your wishful commitment to Zambia. First, what is the primary premise of inviting mining multi-national corporations to invest in the mining sector? Second, how does a responsible government ensure that there is even distribution of wealth from its mining sector? Third, what is the rationale of protecting and encouraging a mining giant such as your company which opts to utilize capital-intensive methods over labour-intensive methods? It is no wonder you are now lying to us.
If you want to c how incompetent governments fail to manage their resources, take a look at Venezuela. It has one of the largest deposits of oil in the world but the country is still languishing in poverty. The basic necessicities are in short supply they even ran out ot toilet paper…
@Black Coffee:
Venezuela nationalized its oil industry, and no one in the Zambian Govt is saying we should renationalize the mines, or KCM in particular—that’s the difference between Zambia and Venezuela, bro!
All what the Zambian Govt is asking for is FAIR PLAY by investors so that our mineral resources can start making a difference in the lives of its owners (the Zambian people). Manipulation of labor contracts and Arm-twisting the Govt by investors so that they get away with paying close to NOTHING in taxes should be unacceptable to any thinking and reasonable Zambian.
It’s cool to have a leader such as Sata who can see through their tricks. Sata has lived in the uk. He knows what he wants for Zambia. He is the best leader Zambia has ever had.
How do you produce copper when you have no concentrates? These guys should be serious. the low productivity is not due to employees but management. they claimed konkola north doesn’t have copper but today lubambe is producing copper from the same site.
Ignorance at work…Konkola North happened before privatising Chingola and Chiliabombwe mines.
MC Mehta, you are putting forward a clumsy suggestion designed for mediocre desperate people and ill-educated or half-baked academics. Nothing makes sense in your package, in fact your are incubating a crisis which will spill over to other sectors of the Zambian economy in a few years to come. Zambians are asking you not to ferment a problem, but they want you to incubate a sustainable solution to the impending job crisis in the mining sector. Put differently, the Zambian people want a mining industry which can sustain those already employed in their employment. Furthermore, the citizenry want a mining industry which is labour intensive and, which can absorb the massive unskilled and semi-skilled unemployed youths. Besides, many graduates enter the Zambian labour market in search of jobs
Ba boom I almost mistook you for someone 2ho is sensible till I read all your theories unrelated to tje topic. You could have done it in a subtle way
Thanks
The problem here is that, you have a government which has left the unemployment problem in the hands of the private sector, and the private sector/capital has sidestepped the so-called responsibility (sorting out the unemployment crisis) it has been charged by government. The huge unemployment rate in Zambia, is not a crisis we can afford to ignore or wish away. Those massive unemployed youths are people who we know. And sometimes many of them are either clients of the Zambian Correctional Services or some of them are frequent clients of the Zambian Police or some of them are shot dead by the very same police which is frustrated at the failure of not sorting out the inflated crime rates. On top of that, there is a problem of the training institutions which produce mismatch skills which do
Well done Sata we love you.Na 2016 nipabwato.
Coward and stupid man!!
You are just afraid of Sata.
A coward is you.Only cowards use a language like yours.Check yourself dude.
Kuti wasuka wakota kanselele.. SHATOP was on fire last night.
And we wonder why we don’t move forward. ..a company wants to modernise and its being stopped.
I wonder how you reason – creating artificial unemployment and companies evading tax is moving forward you!
You are an example of an empty head but unfortunately you are not the only one in Zambia at the moment! Overall the country is going backward since the days of KK!
I want to commend His Excellence Michael C Sata for coming out strongly against the so called investors. I wish to ask the president to go ahead and revoke the mining license for Vedanta in this country and look for a more serious investor who will be willing to actually invest in the mines currently owned by KCM. Please, we beg you Mr President to send these people away. They are going to destroy everything that Zambians have worked for in the past seventy years. If you allow Indians to continue mining here, they will be taking mines to another dead end in the next few years. Those of us that have worked at KCM know what we are saying. KCM should not continue cheating us that copper is finished. They want to mine without spending money. They are in serious debts.
MC Mehta, you softly started off by sugar coating your venomous speech by shifting your blame to misunderstandings between you and the government. Furthermore, you raised an element of “mechanisation”, note that capital-intensive investments add to labour costs and it is very expensive, this is a paradox. How does a firm recuperate its funds which have been injected in capita intensive projects? Answer; it is to resort to job cuts or outsourcing some of its non-core sectors or subcontracting its operations. All the above compound the unemployment crisis in Zambia. Your ultimate objective to mechanise your mining operations so as to save labour expenses and pay your lip-offs in form of taxes to government. Furthermore, that approach moulds an era in which we have a jobless growing economy
You see, Indians at KCM are cheating that they want to mechanize their mines but those of us that have worked there know very well what Indians do to their new machines. In a bid to reduce costs, they refuse to buy spares for the machines and will only buy when a major breakdown happens. When Kumar was addressing job cut meetings he and his colleagues were saying the cost of doing business in this country has gone up because the government has not kept their part of the agreement by removing fuel subsidies and increasing royalty tax from 3% to 6%. indians have never been honest regarding this issue and are always changing goal posts. Please Mr Sata I appeal to you to chase these people out of our country, they are not wellcome in our mining towns. Remember what Indians did to Luansya.
Just shut down the damn thing. 18 000 employees producing 140 000 tonnes of copper? Please lay off 15 000 of these miners so that shareholder value is realised! Stop treating KCM like a charity. Show them the exit!
KCM ‘S Vedanta thinks they can make money from Zambia without continuous investment.At the moment they are making a lot of profit from Zambia but they want a situation where they can make profit and at the same time remain with a lot of profit after paying the loan they got for sinking kdmp shaft.A reasonable investor would wait until they start producing copper from kdmp and then claim profits.the current shafts which produces copper gives kcm a lot of profits even at the current copper price.
coming to the issue of mechanism and automation,they should first buy the machines and bring them to Zambia and then tell the employees that they have bought machines which will require few labour to operate them.Then employees and the government are going to accept.
Good morning
@ BOOM & WHATEVER I like your arguments. The problem with us Africans is that we’re too forgiving. That’s the difference between us and the west. They don’t compromise with their economy and they know no mercy when protecting national interests. Yet they expect us to be subservient to them when dealing with our people and our economy.
Now that they have seen how serious our government is about protecting national interests, they suddenly start shifting goal posts and talking about “miscommunication”.
To our government, I say stand firm! Keep on fighting for Zambians to get fair treatment and for Zambia to get a better share from it’s resources. The point is: investors did not come to support our people or build our economy, they came to enrich themselves.
@Nine Chale
Good morning to you too,
My analyses above were crafted out of a clear spirit of impartiality, and reflect the mind-sets not only of MC Mehta, but those of the mother illegal cartel which sets conditions of how to run business operations in investment receiving countries. It is very significant that you put forward many elements which should be modified and amplified by those charged with the tasks of formulating sustainable economic policies and implementing them in the Zambian environment.
Good morning all the time!
Well, at least now they know someone (GRZ) isn’t playing! Unlike what we had during MMD years, we now have someone to stand up for the “little man” against this monstrosity called “unbridled capitalism.”
Like some of us have stated before, sometimes “BLUNTNESS” is the only language some of these investors understand. Treat them with kid gloves and they will see it as a weakness and blackmail you into giving up more undeserving concessions. Profits are never enough to a “true blueblood capitalist.” Workers are simply expendable ponies in their “game” of manipulation.
And I don’t think there was miscommunication to begin with here. Vendata really wanted to use mass layoffs as leverage to force Govt into a tight corner so the company can get more tax concessions, period!
But the same jobs MMD created them. whether u like it or not copper prices are forecasted to fall mining companies will retrench
@pelekelo ben sitali:
True MMD created those jobs, but they are very unsecure jobs with very few benefits—even when copper prices were astronomically high, miners in Zambia benefited very little and were still very insecure in their jobs. That’s the legacy MMD will and can never run away from!!
No one is saying KCM shouldn’t layoff workers. It is the manner in which they tried to go about the layoffs that ticked off people. If you have followed this case for a while now, you realize that KCM has given varying reasons as to why these layoffs of such a large number of workers at once are necessary. Earlier (5 or so months ago) about 2000 workers were almost laid off for a different set of reasons. Now it is mechanization and quality of the copper ore. Really!????
How much tax do these capitalist pay to the govt? Another problem is that the little tax they pay is abused by the govt and nothing trickles to the poor.
As a trained defence attorney and a corporate attorney, a serologist, a criminalist, an economist and an established university academic, I remain consistent in postulating that your attempts misrepresent the reality, and are an end in themselves and in nonsense. MC Mehta you are bent on job destructions in this labour-intensive industry. You are must not only be seen to be training the unskilled and semi-skilled unemployed massive youths, but you must actually provide them with transferable marketable skills. However, through your actions, you are decimating the industrial training system which is suppose to act as a safety net for the retrenched employable persons by switching to capital-intensive methods in the mining sector. There are no trickle down benefits in this strategy.
Whose job is it to skill up labour. China first developed their workforce with right skills for everybody to want hem. That s why all the multinationals went to China and now they are where they are. You are just parroting some strange thoughts here&
One more thing. I would like the government to realize that the man who has been left to act as CEO at KCM is Kishore Kurmar’s puppet and that’s the guy that Kumar entrusted to successfully execute the laying off of employees. That’s the man who was defending kumar’s theories during job cut meetings. We hear that Mr David Kaunda was promised a lot of money if he helps facilitate the job cuts successfully. And as a government pliz you should try to ask questions like why a big mining company can choose to appoint a CEO who is not a mining expert. What I know is that all seroius mines are run by Mining engineers, Geologists or Metallurgists. Or at least someone from a scientific background. Some of these things are supposed to be law. How do you allow people like Kumar to run our mines…
Okay, the board appoints the CEO…who gets appointed is not our business. I do not think what you are saying about DK are thoughts that you have carefully thought about. Both him and CEO are bound by the board decision. On the surface your comments are highly malicious and just hope that you are driven by ignorance.
currently number three and one shafts in in chililabombwe are mechanized but kcm is failing to maintain the machines in terms of buying spares on time if there is a breakdown.They are complaining of cost for buying fuel and oil.There is nothing good to these Indians.They only operate well in wholesale where they sell sweets and gigz.
Vote 4 Nevers Mumba & Zambia shall be saved in 2016…
And what proof do you have?????
We don’t want another high-maintenance family in State House ever again. The years of FJT Chiluba/Vera shenanigans were enough!
Pliz. Indians should go. If it means closing the mine, so be it. We can not continue living like slaves in our own country, being controlled by people like Kumar who are nothing but probably just related to the owner of Vedanta. The government should come and audit the same indians at KCM to find out their qualifications. There is this guy called Manish dawal. He is the Chief financial officer but everyone wonders what qualifications the guy has. That position for a Zambian probably would demand a professional qualification, a bachelor’s degree, a master’s degree and a lot other certificates maybe even a PHD. But here is some guy with a very humble education from india who has been given such a job. As if that’s not enough, we have Kumar who is insulting our president. Vedanta should go
KCM wants to mechanise so that they can finish the copper quickly and by the time they are done with our copper, this same machinery will be scrap metal.
When are going to start digging our own copper?? The government should give incentives to Zambian companies adding value to copper like they did with minibuses during chiluba time. For example, any company manufacturing anything containing copper ranging from plumbing materials to cables should be exempt from tax.
LT, What is there to moderate about my comment. You seem to enjoy people who insult others.
The government should empower Zambia small scale companies adding value to copper by not taxing them while at the same time banning or discourage importation of such products. Forget about the so called market forces or we shall remain doomed forever.
This Indians they always talk about what they have invested in our country but what they have taking nobody knows,please Zambians open your eyes
these please,sambilileniko ichisungu before parading your ignorance on the blog.
Indians are tikkey the problem is high profile Zambians in this mine, they steal big time the reason why 11 of them were fired last time. even now we have greedy guys who cheated the Indians that they retrench by saying copper has finished
Having ready through all the posts on this subject am left with no option but to conclude that the readers at LT do not understand the dynamics of mining or whose responsibilities it is to create jobs. No wonder some people it is heroism to shout down a CEO of a company via a camera. KCM has many legacy problems from the 60 years of mining and I think that is why they have nearly 18 000 employees. The new mines like Kansanhi and Lumwana probably employ only 5 000 workers each and produce more.
Napoleon makes sense. Majority of bloggers on this article are full of hatred and negative emotions. If they knew the challenges of mining, workers attitude and productivity they will shut up and tell Sata to shut up as well.
For your information if you do not know, KCM is a business entity and its owners are not scared of Sata or any of his minions. They are seasoned business people and know very well that Sata’s is one term government and they have to bear this unnecessary monster like every other Zambian.
And for your information, Guy Scott has talked to at least 16 parties in Zambia, London and Sri Lanka and nobody, nobody, nobody has shown an interest in taking over KCM.
Let Sata, if he thinks and has guts, takeover KCM from Vedanta and find a buyer or let any of his cronies…
Boom or whatever, capital intensive mining has tremendous benefits and far outweigh the labour intensive mining
– More production
– lesser cost per ton
-more taxes to government
-more money available for the government to diversify economy (future of zambia lies outside and away from mining- mining shall be a medium to generate resources for diversifying into agriculture, tourism, small scale industry, distribution hub for central africa
– education hub
-communication and technology hub
list is endless. But do not expect that from PF government. They are moribund in the past, inter and intra party fights, lining their pockets and borrowing to make a HUGE cut for stashing out in foreign banks.
We need a visionary, who is a self-made man and does not make politics as an…
We took over the mines from Private companies in the 70s. We operated them (GRZ) for more than 20 years until we ran them down( Tinagwesa migodi yonse.) We sold them back to private companies after 1991. Now it looks like we want them back. This looks like a vicious circle. May I propose that government gets serious with tax collection or better still buy 50% shares in all these companies. The question again is does GRZ have the resources to purchase shares? If not the tax collection and good labour laws is the way to go, otherwise a private company cannot be forced to employ beyond its capacity to pay reasonable salaries. Keeping large numbers of workers at very low salaries will result in labour unrest
it’s high time these stinking faggots(indians) pack and go..pliz mr sata it can’t be later than this..
Please Mr MC Sata, I earnestly appeal to you to chase these people out of our country, they are not honest people, they are not welcome in our mining industries. Give the mine to U & M or Carmine of Brazil and Australia respectively. Remember what Indians did to Luanshya. Indians are liars and cannot be trusted by Zambian people.
Funny how people can continue gropping in the dark!
KCM are homeward bound, they have made their loot. Nothing is going to stop them. It is every miners wish that they go. Soon it will be another Luanshya.
Its a total mess, the earlier they go the better
.KDMP? The shaft is wrongly placed and more capitalisation is required to see its production.
In short: “abekala mumupundu ebomfwa ifyo shipona”
Ba KCM please how will you produce copper without U&M’s machines?
One time that’s fine with me!
Govt please sort out this mess with these Indians.Good move so far..