Tom Albanese, Chairman of Vedanta Resources Holdings
Tom Albanese, Chairman of Vedanta Resources Holdings

Foil Vedanta responds to Tom Albanese’s refute of evidence against Vedanta in Zambia

10th February 2014

Last week several articles were published in the Zambian media reporting on a press briefing held by Vedanta executive Tom Albanese following a ‘closed door meeting’ he held with Labour and Social Security Minister Fackson Shamenda in Lusaka, Zambia, on the 7th February. Mr Albanese met with the Minister to refute claims made in Foil Vedanta’s report ‘Copper Colonialism: Vedanta-KCM and the copper loot of Zambia’, released to the Zambian press on January 31st. The report demonstrated that, contrary to their claims, Vedanta’s subsidiary Konkola Copper Mines (KCM) are making considerable profit in Zambia and are guilty of casualising the labour force as well as causing severe environmental damage.

We want to respond to some of the claims made by Mr Albanese, and present more evidence of Vedanta’s campaign of misinformation here.

An article published on the 7th February in the Zambian Daily Mail states that:

..Mr Albanese said the profit and loss accounts of KCM are transparent. He said audit reports which are thoroughly scrutinised are made available within the country and outside.
“On behalf of the shareholders and subsidiaries of Vedanta, the reports are prepared according to Zambia, United Kingdom and United States (US) financial regulations,” Mr Albanese said.

He said despite KCM making profit, most of it is lost to taxes and operational costs.

“I can assure you I have a responsibility to ensure that those reports are transparent. I will be happy to have face-to-face discussions with any NGOs that feel the company is externalising its profits,” Mr Albanese said.

He disclosed that Vedanta has over the past nine years invested over US$2.3 billion into Zambian economy through KCM.1

It is very hard to find out exactly how much profit Vedanta is making from KCM as KCM’s annual reports are not made public in Zambia or elsewhere, contrary to Mr Albanese’s claims of transparency. Lacking this figure, our report uses figures from Vedanta’s 2013 annual report to calculate profit.2 Page 187 of the report clearly states that production costs at KCM were 255.1 cents/lb in 2013, while 216,000 tonnes of copper were mined. At a copper price of $7,300 (the average during 2013) this would constitute a profit of $362 million (tonnes of copper produced x value of copper per tonne – cost of production). We also reported that financial analysts from Global Data suggested that KCM made 12.19% of revenue for the entire Vedanta group (18 subsidiaries) in 2012.3

If the production costs and volumes recorded in Vedanta’s own annual reports are incorrect we would welcome Vedanta to amend them and make KCM’s annual reports available to the public.

We do not know how much Vedanta paid in tax in 2013, but it is unlikely to add up to $362 million. In our report we noted Vedanta’s 2007 brag to investors in a presentation that PAYE (Pay As You Earn) deductions from worker’s wages made up nearly 50% of their tax contributions to the Zambian Government4, and that their 2013 Annual Report states that they have ‘US$1,263.4 million of unutilised tax losses’ at KCM which will minimise tax payments and ‘generate economic benefits for the company’.5 These two claims suggest that tax and royalty payments are fairly minimal.

We would welcome Vedanta and the Zambian government to reveal the actual tax payments from Vedanta-KCM to the Zambian exchequer over recent years.

Secondly, Vedanta often repeat the mantra that they have invested $2.3 billion in KCM. This ‘investment’ is not a charitable gift to the Zambian state, but capital input to help them increase their profit from mining and processing activities, such as the new Nchanga smelter and the Konkola Deep Mining Project. It is not the Zambian state who will gain from these ‘investments’ but Vedanta itself, through increased profits and production. In fact the Development Agreements Vedanta signed with the government in 2004 allow them to deduct 100% of capital allowance from any investments made – such as prospecting, buildings and equipment, so these ‘investments’ benefit the company twice – through increased production and tax breaks. Vedanta’s secret Development Agreement for KCM can be read at the website of Mine Watch Zambia, to whom they were leaked a few years ago.6

On 6th February the Lusaka Times also reported that following the closed door meeting between Tom Albanese and Labour and Social Security Minister Fackson Shamenda,

‘Government and Vedanta Resources Plc have amicably resolved all differences surrounding the retention of workers at the mining giant’, and agreed ‘on the need to reduce the number of workers being employed as casual employees as well as engaging them on contractual basis.’ 7

It is wonderful for KCM employees to know that the planned 2000 redundancies may not go ahead, and that the 11,000 strong (out of 18,000 total) casual labour force may be given contracts and security. However, there is an irony in this announcement coming from Tom Albanese, the six year CEO of Rio Tinto, who retired in 2013 and became Chair of one of Vedanta’s investment holdings subsidiaries Vedanta Resources Holdings Ltd (NOT Chair of Vedanta Resources as the two articles claimed). From 2007 until 2013 Albanese presided over a number of major workers rights violations at Rio Tinto, a global mining company famed for their ‘company wide de-unionisation policy’.8

Just a few days ago 200 people marched against Rio Tinto’s ill treatment of mineworkers outside the international conference, Mining Indaba, in Cape Town. News reports claimed ‘a labour movement that represents workers in some 142 countries claims Rio Tinto is one of the most aggressive anti-union companies in the sector.”9

Rio Tinto as well as Vedanta have been removed from the Norwegian Government Pension Fund’s Global Investments for ‘severe environmental damages’ and unethical behaviour following investigations. The Norwegian government divested its shares in Rio Tinto in 2008, while it divested from Vedanta Resources in 2007, and also excluded Vedanta’s new major subsidiary Sesa Sterlite from its portfolio just a few weeks ago in January 2014. 10

It is alarming that Tom Albanese would be praised for his promise of workers rights and security by the Zambian papers without a mention of his history of presiding over well documented human rights abuses. The Zambian authorities should keep a close eye on workers’ rights standards at KCM to ensure recent promises are enforced. The Lusaka Times article quotes Labour Minister Mr Shamenda’s statement that:

“With new management at Vedanta and PF [Patriotic Front] being new in power, we have agreed to bring on table the new approach to business to have a win, win situation as we bury all our past differences and looking forward to cordial working relations.“11

Who are the new management at Vedanta Resources? The management structure has not changed recently, and Anil Agarwal remains the Chairman and 68% owner of Vedanta (as of 7th February). Has Tom Albanese misled the Zambian media that he is in fact the Chairman of the company (rather than the Chairman of a little known investment holding subsidiary), or is this an error in printing?

Finally, our press release on our recent report highlighted the fact that Vedanta have created misconceptions in Zambia, such as the predominant idea that they are an Indian company when they are in fact British. We want to highlight the importance of this distinction here.

Vedanta are registered and domiciled in Britain, where majority owner and Chairman Anil Agarwal is also a resident and lives in a $20 million mansion in Mayfair, London. It is the British authorities which regulate Vedanta, and British tax laws and ethical standards which they must abide by. The London registration is important to Vedanta for attracting investment, and because it allows them unrestricted use of the UK’s many tax haven territories, such as the Bahamas islands – where Anil Agarwal keeps the enormous profits from his 68% share in Vedanta, via his holding company Volcan Investments, avoiding paying any tax in the UK or elsewhere. Vedanta’s British registration is also important because any grievances with Vedanta in Zambia should be taken to the British, not Indian, authorities.

For more information on Vedanta’s management of KCM in Zambia, including its undervalued sale to them in 2004, and their environmental and workers rights violations, as well as their pattern of abuses in other countries where they operate, and an analysis of the global interests controlling Zambia’s important copper resource, please read the full report ‘Copper Colonialism: Vedanta-KCM and the copper loot of Zambia’ on our website.

Foil Vedanta is not an NGO, as media reports have claimed, but a grassroots international solidarity group linking communities affected by Vedanta and carrying out cutting edge research on the company and related issues.

www.foilvedanta.org

1 Zambian Daily Mail, 7th Feb 2014. ‘Govt assures of permanent jobs at KCM.’ http://daily-mail.co.zm/blog/2014/02/07/govt-assures-of-permanent-jobs-at-kcm/

2 See Samarendra Das and Miriam Rose, Copper Colonialism: Vedanta KCM and the copper loot of Zambia. p.12.

3 Global Data, Vedanta Resources plc (VED) – Financial and Strategic Analysis Review, 18th July 2013.

4 KCM, a presentation for investors on Vedanta and KCM, 2007; – the presentation states that PAYE totalled up to US$35million out of a total of US$75-80 million. – quoted in Aby Diamond et al, October 2007, Undermining Development:Copper in Zambia. ACTSA, SCIAF and Christian Aid.

5 Vedanta Resources, Annual Report 2013, p.158

6 See http://minewatchzambia.blogspot.co.uk/

7 Lusaka Times, 6th Feb 2014. ‘Vedanta Resources dismisses reports that KCM has been reporting false profits and loses’. http://www.lusakatimes.com/2014/02/06/vedanta-resources-dismisses-reports-kcm-reporting-false-profits-loses/

8 Corporate Watch, Rio Tinto Labour rights violations. http://www.corporatewatch.org/?lid=3594

9 Rahima Essop, 7th Feb 2014. Eye Witness News South Africa. ‘Protests against Rio Tinto at Mining Indaba.’ http://ewn.co.za/2014/02/07/Protests-against-Rio-Tinto-at-Mining-Indaba

10 http://www.regjeringen.no/en/dep/fin/Selected-topics/the-government-pension-fund/responsible-investments/companies-excluded-from-the-investment-u.html?id=447122

11 Lusaka Times, 6th Feb 2014. ‘Vedanta Resources dismisses reports that KCM has been reporting false profits and loses’. http://www.lusakatimes.com/2014/02/06/vedanta-resources-dismisses-reports-kcm-reporting-false-profits-loses/

[Read 37 times, 1 reads today]
Loading...

28 COMMENTS

  1. These are articles where Zambians claiming to be educated should show whether school changed them or they changed school by making it dilapidated(especially the toilet). Educated people should not waste time debating trivial matters.

    0

    0
  2. Well I must say, am not really surprised. So long as govt trade policy is to prostitute itself at all cost to foreign firms to get FDIs, this sought of behaviour by these firms will continue. Govt should learn some lessons from the Zimbabwean policy of indigenous Economic Empowerment Programme (IEEP).

    0

    0
  3. The problem with Zambian Technocrats and politicians is many times they miss out the small print. The small print hides terrible conditions that they simply sign their rights off and end up loosing out. Contractual schemes are so cleverly done by these big companies so much that the ever smiling Zambian expert or politician end up smiling away with perpetual loss to the country. Politicians need to be thinking over and over about what they commit the country to. Other people out there feed on Zambian resources like ticks and maggots whilst the host citizenary keep suffering. Please politicians and technocrats in Zambia open your eyes. Keep suspecting any figures, scrutinize them to great detail, urgue to detail instead of smiles. By the time you smile stops the country will have lost.

    0

    0
  4. @TYWIN I can’t agree more with you. Generally, the only benefit the country gets from foreign investors is taxes especially PAYE since they always try to dribble in relation to corporate tax- Nothing like infrastructure development. One just needs to come to Chingola to see how dilapidated the roads in the mining area are. The only solution is for us as Zambians to take up these investment opportunities and plough back profits into infrastructure. An example is Mr. Kazenene who owns or owned a mine and has invested part of his gains into wonderful structures around Chingola. We can do it on our own

    0

    0
    • Even Zambians are externalizing money from areas were it is made and taking it somewhere else. eg. Kazenene investments and Richard Kazala got their money from Solwezi. So it is not foreign investors, even Zambians are doing it.

      Mr. Kazala and Mr. Kazenene are getting millions of dollars from Solwezi, but they have not even built a toilet there. They have therefore created no employment for the people of Solwezi.

      0

      0
  5. Smiles, smiles, smiles smiler. Do not look only at the allowance you going to get, thar dine and wine at the end of signing, but havw a bigger picture. You are actual smiling with thieves who have come to steal from your country. They are so clever that you do not even reaiise it. They ever entice with this and that but under their they behave like ducks on water against the tide, you think the duck is just floating and yet it is busy puddling with legs underneath. Capitalists have devices smart ways of stealing whilst you are watching. Competing for resources between the owner and his clients. Clients can get clever than the owner. Its vicous, it real competition and it never stops. If you keep blinking you loose out. So many resource being tapped and yet little gain and progress.

    0

    0
  6. Vedanata is a complete prestine capitalist. Its unfortunate few years from now we will have deserts on the copperbelt with nothing to show for. Why has the goverment been blinded when in the actual sense more than 2000 employees have lost employment through contracting companies.kcm has been grabing contractors` sites so that they are forced to lay off.and there you are kcm has rescinded the decision to lay off. May God deliver mother Zambia. Its sad.

    0

    0
  7. INFORMATION IS GIVEN TO THE GOVERNMENT FREE, THERE IS NO SMOKE WITHOUT FIRE, CAN OUR PS, DIRECTORS AT MINES AND FINANCE MINISTRY TAKE THIS MATTER UP, ZAMBIA IS LOOSING MONEY EVERY DAY. I WISH THE PRESIDENT SATA CAN INSTRUCT THESE FAT FOR NOTHING CIVIL SERVANTS TO FOLLOW THESE LEADS WHICH ARE GIVEN, INSTAEAD OF YES BWANA ALL THE TIME. BE PATROTIC FOR YOUR COUNTRY PLEASE. YOUR EXECELLENCE COME IN AND PROBE THIS ISSUE ZAMBIA IS LOOSING A LOT OF MONEY. ITS REALLY SAD THAT WE ARE GIVEN INFORMATION AND DO NOTHING ABOUT IT. THIS IS AFRICA’S TIME WE HAVE ALL THE RESOURCES LET US MANAGE THEM PROPERLY. THESE SO CALLED INVESTORS THEY DO NOT HAVE ANYWHERE ELSE TO INVEST LET US NOT TREAT THEM LIKE EGGS NO PLEASE. STUMP YOUR AUTHORITY.

    0

    0
  8. Have we really been made to believe that we neither have the capacity nor technical know how to run these investments? If the West who are busy preaching about liberal market can hold on to strategic cash cow corporations who are we not to do the same? To hell with these FDIs!

    0

    0
  9. Foil Vedanta operates as An Opposition Party that is against anything that the Ruling Party does. All their publications are meant to dent Vedanta image with information they gather from unreliable sources or indeed from the streets.

    When you read their article “Copper Colonisation” (last paragraph on page 5) you find that they claim to have failed to obtain true production statistics from neither KCM nor the Zambian Government. So, who is furnishing them with their speculated information??? Is it the street vendors who steal ore and copper from KCM day in and day out???

    I have just come to believe that intentions of Foil Vedanta are ill concieved and very soon even the Zambian Government will ban them. KCM provides statistics to Govt and Foil Vedanta has failed to obtain these…

    0

    0
    • Iwe Mambala….whom can you cheat? That time of MMD when you used to think Zambians can not analyse business issues is gone dear. We know that you make profits and yet you pretend not to …you have no heart for Zambians. Your main objective is to steal from Zambians. You are more interested in supper profits than the well being of Zambia. So just keep quiet .

      0

      0
    • Bwana “Truth Hates” if you say that the revelations by Foil Vedanta are correct then you are implying that the Zambian Government officials together with the Directors at ZCCM IH are all very daft that KCM is exporting copper under their noses without them noticing it. The Zambian Government has the correct facts about KCM production statistics and that is the reason why they won’t act on the falsehoods being peddled by Foil Vedanta.

      You need to know that ZCCM IH has shares in KCM and their Directors are Board Members who have all details of operations at KCM. Empty cans always make noise which sooner than later dissipates in thin air.

      0

      0
    • you can not escape the fact that what the mines contribute to the zambian treasury in terms of taxes is paltry.the less than one million formal workers in zambia pay significantly more taxes.

      it goes without saying that successive zambian governments have simply failed to hold these mines to account on this score.even without this foil vendatta report the fact will still remain unchaged and pretty obvious.

      the bretton wood institutes rarely take sides with poor african goverments.but in this particular case,even
      they,have noticed the immorality of the status quo and have advised our government to start collecting more tax from the mines.

      really this mining taxes issue in zambia,is a no brainer,though people like you and those in government chose to be the “the only jew “…

      0

      0
  10. What are the motives of this “Foil Vedanta ” group. They sit in their comfortable homes and offices and make all these false statements about a company which is doing some good in the country. Providing jobs and money to the economy. Organizations like this Foil Vedanta are not doing anything for the people and should be held to account for their actions

    0

    0
    • I agree – they seem to have a one-dimensional agenda summed up by their name – simply “Foil Vedanta”. Nothing else, nothing constructive, no alternatives to suggest. Also note they say nothing about Glencore or any other company, only Vedanta (and Rio Tinto I suppose)

      0

      0
    • NAT, YOU SHUOLD UNDERSTAND THAT IF ANYONE GIVES YOU INFORMATION IT DOES NOT MEAN THAT YOU HAVE TO REACT PROMPTLY ON THAT INFORMATION.IT IS JUST AN EYE OPENER FOR YOU TO DIG DEEPER AND TRY TO RELATE WHAT YOU ARE GIVEN TO YOUR OWN FINDINGS. YOU CANT JUST DISPUTE WHAT FOIL VENDATA IS SAYING.I DONT THINK THERE IS ANY NORMAL THINKING PERSON WHO CAN CONTINUE HOLDING TO BUSINESS WHICH IS ALWAYS RUNNING ON LOSSES. THESE PEOPLE ARE BUSINESS PEOPLE AND THEY ARE HERE TO MAKE MONEY.I DONT UNDERSTAND WHY WE ZAMBIANS ARE SO MEAN THAT WE CANT MAKE SENCE EVEN ON THINGS THAT ARE PLAIN.WHATEVER FOIL VENDATA’S AIM IS ,PLEASE LET US FIND OUT THE TRUTH ABOUT THIS ISSUE. I FEEL IT CONTAINS SOME SUBSTANCE!

      0

      0
  11. I am sure it can not hurt the Goverment to probe this information further, it can do good to both the investor and the government

    0

    0
  12. Have you ever head of Zambian hospitality? From childhood/early years in primary school, Zambians have been told to smile/dance and show warmth to visitors. Especially if those visitors have SOME PARCELS for the headmaster or the school and are white.

    During Kaunda days, this worked quiet well. But starting with the capitalists in MMD through to PF, we have continued to smile. Unfortunately, we are now smiling at thieves and vultures. This observation coupled with laziness among our technocrats, especially the fear for simple arithmetic and the lack of inquisitive minds is leading us into serious trouble.

    Welcome to the true Zambian hospitality.

    0

    0
  13. Yes these guys are thieves…just look at how they wanted to fire 2000 workers, but thanks to PF and Sata for telling them off. Please Zambians let us not treat thieves like Vendata with angels’ cloves when they come to our country. We must demand win-win deal from them. The other thing is that as Zambians we can also get involved in these investments not leaving things to thieves.

    Peace and Prosperity to Mother Zambia.

    0

    0
  14. It would be nice if Foil Vedanta would state what they want Zambia to do about this big scary nasty company. It’s easy to come to Zambia and stir up trouble, but less easy to create jobs for Zambians who desperately need them. Anyway a bit of questioning of the status quo is always healthy

    0

    0
    • now u are talking ba banda,as far as we don’t know the Agenda behind Foil’s claims,we still need a solution at the end of the day,n i wish our giovernment can state their position NOW ASAP!

      0

      0
  15. Look at standards on capital allowances back to back with enforcing oversight in statutory audit analytics of the statements on mines vertically and cross sectional policing and following the reports and opinions researched and written by sale side analysts on these mines to investors by major investments firms whose reports in most cases are factual based on certain honest and factual opinion capable of being reliable upon without intent to mislead on the basis Keeping a track record of reports and announcements made on the mines with help for long-term
    You cannot be on top of things unless you create capacity and be equal to the task within cairo rd lsk

    KCM employed best…

    0

    0
  16. Forgive my ignorance but can someone educate me please. How can we get this infestor Vandeta screw us when we have ZCCM as part of KCM. Whose interest do they represent and what is their role? And where are all our “educated citizens” who should have raised the alarm bells before we were raped? Can certain things be revisited in terms of what the govt signed up to to change things for the better? How about consulting an independent organization local or international on how we as a country can benefit from our natural resources rather than pretending that we know what we are doing when we are clearly not. Last year I was reading about Mopani and now this and God knows what next.

    0

    0
  17. it was also gratifying to watch and listen to Jacob Zuma state o union address today quiet inspiring forecasting on core sectors to move the country and reflect on the gains

    If colleagues are doing it and creating economies we can also work towards the same drawing on our weaknesses and strengths whilst at the same time creating capacity in institutions equal to the private

    Watch President Zuma State of union address or get a copy

    0

    0
  18. Follow coverage of Kalumbila also recently covered analyst where chartered inn to write a paid researched reports on the investments on Kalumbila Its such reports for which the locals and Gov ministries should make hands on or participate in

    They came worked and flown back to Canada and Us Follow the works same with KCM especially on the sale side You will easily see the shenanigans or red flags in reports

    0

    0

Comments are closed.