Mines Minister Christopher Yaluma says Government will not nationalize Konkola Copper Mines (KCM) in view of recent revelations by Vedanta Resources Chairman Anil Argawal that the mine has been giving him profit exceeding $500 million per year.
Mr. Yaluma has however warned investors in the Mining Sector that government will not hesitate to take necessary action against any fraudulent activity to prevent loss of much needed government revenue and save jobs.
Speaking during a media briefing in Lusaka today, Mr. Yaluma says as at 30th September 2013, KCM’s total liabilities of one point five billion US Dollars (USD1.5 billion) exceeded the current assets by US $123 million, and that consequently KCM was unable to meet its obligations as they fall due.
Mr. Yaluma has revealed that Vedanta Resources Plc has up to date not complied with its commitment to inject three hundred and ninety seven million US dollars (USD 397 million) into KCM as foreign direct investment.
Mr. Yaluma states that from the time Vedanta Resources acquired KCM, two point eight billion dollars made up of internally generated funds by KCM, bank loans and finance leases, was injected in capital projects which included the Konkola Deep Mining Project (KDMP), concentrator expansion at Konkola mine, the new concentrator and smelter at Nchanga mine.
He says when taking over KCM, Vedanta Resources committed itself to provide a bank guarantee of four hundred million dollars towards the outstanding loans that KCM had on its books.
Mr Yaluma states that government will ensure that KCM meets its obligation of recapitalizing the mine, paying off its debts to lenders, suppliers and contractors including concentrate suppliers.
And Mr Yaluma says the issues that the Vedanta Chairman alluded to in the publicized video especially those touching on the company’s revenue and its profitability will require investigation by the government.
Mr. Yaluma says government will ensure that at the end of the day, the people of Zambia get a fair share of the returns from their mineral wealth.
He has assured investors in the mining industry that government regards them as partners and as such government will endeavor to dialogue to resolve any arising issues.
Agreed ! Nationalizing is not a good option.Making sure that those mine companies pay all the taxes required is the way to go though.There is also need to cut loopholes that makes these foreign investors to rip us through their continued use of tax havens.
Good point there Saulosi.
Very sensible comments, Saulosi. Anal’s comments must not spring a senseless frenzy of Malema-style jingoism. There certainly is a solution to our poor regulatory enforcements.
@Saulosi, its unbelievable that you can think so wrong.
We should start doing some of these things ourselves. Send some people do trace where our copper goes. Find out to which countries, to what factories and what products are made out of it.
Are you saying Argawal just got away with a friendly warning? So this is how I see it….. You will drag this issue under the carpet with a light punishment at most just to sooth our burning hearts and then it’s back to business. Waiting anxiously for another Argawalfy clip!
Seriously no action .The Zambian people can still take class action lawsuit and find a competent corporate lawyer if they feel they are not being represented well
Zambian should not do business with Indian business investors. That is just common sense. Every Zambian knows Indian business men are in Zambia because their exploitation will have no repercussions. Unfortunately unscrupulous people were permitted to invest in Zambia (thanks to corrupt Mwanawasa).These vultures are: toxic, corrosive, thieves,bribers, dishonest,launders-the list is endless. Argwal has demonstrated his ill will to Zambians therefore we do not need his investment. He can take his dirty money and values elsewhere. The Chinese can take over Konkola until Zambians gain expertise to run mines. At least Chinese investors keep their word.
Well said Kenny. The Indian business men you find in Zambia are corrupt. Elsewhere in the world you may find an Indian investor with integrity but not in Zambia or Africa at large. Only the lowest calibre of investors are found in Zambia. Standard of economic investment need to improve in Zambia. Look at what happened with banks(indo zam, finance,etc) that had Indian business men at the helm. Many brilliant Zambians who built strong business were financially ruined because of those so called Indian business investors. Meanwhile the culprits responsible for liquidated banks, escaped to India with millions of dollars stolen from honest Zambian business men.Integrity and corruption do not mix. These investors need to expunged.
This is an intelligent approach Mr Minister. The Government can’t takeover such massive liabilities and still have money to invest and run KCM at a profit.
The best is to let these guys honor their obligations and monitor them closely. However, there are lessons that should be learnt from this and we must not just accept excuses. Zambia has highly qualified professionals and we can’t accept to be looked at as people who do not know what is happening (50 years of independence)
Also needed is to improve control and monitoring measures both at operational and marketing levels. The ministry of mines and ministry of finance have such frameworks that can ensure investors operate within the government guidelines (not this micky mouse way)
@Kazenki
“The Government can’t takeover such massive liabilities and still have money to invest and run KCM at a profit.”
Look here napapata, the guy Aganwarl just confessed he makes United States Dollars 500 million in net profits from KCM per year, and you say KCM is a liability!? Can you please explain how a liability would generate a profit such as Aganwarls? Them listening to you, I mean these Aganwarl people, with this type of thinking, confirms to them they will get away with this daylight robbery and in the process confirm Zambians are congenitally stupid. Please lets wake up!
@Wantanshi
What I mean is that even if we get these mines for free (Nationalising with a view to run them), they have over a billion dollar in liabilities and if you grab them that means you have to pay that. On top of that since you don’t have money you have to borrow for operations, to make them run effectively. I have worked on a lot of mining projects and I know the margins we are talking about. Yes they have stolen but we can do better.
A mistake was made last time by selling KCM for a song, but that does not mean you should repeat the same mistake. Remember if you have a $1 billion to spend on paying for KCM liabilities, you can even invest that money in a complete new mine of a great size. This is the same amount of money being borrowed through the Eurobond for lots of projects.
We should start moving towards getting what belongs to us. Let them pay their liabilities and inject enough capital before we get it.
Zambian should not do business with Indian business investors. That is just common sense. Every Zambian knows Indian business men are in Zambia because their exploitation will have no repercussions. Unfortunately unscrupulous people were permitted to invest in Zambia (thanks to corrupt Mwanawasa).These vultures are: toxic, corrosive, thieves,bribers, dishonest,launders-the list is endless. Argwal has demonstrated his ill will to Zambians therefore we do not need his investment. He can take his dirty money and values elsewhere. The Chinese can take over Konkola until Zambians gain expertise to run mines. At least Chinese investors keep their word.
Dear Zambians,
when such things happens to us, as a nation, its time we reflect at our own conducts. we should not blame investors that they bare stealing from us. we are the first people who are setting the examples to the investors. Go through the Auditors report you will surely accept that Zambians are busy stealing from fellow Zambians. Civil servants are stealing from government. Minister are stealing and cheating. traditional leaders are stealing from their subjects. further, husbands are cheating on wives and vice vesa.
How do you expect foreigners to come and do business honestly in a corrupt system run by corrupt system from household level to the governance level?
shame on ourselves. WE NEED A SERIOUS SPIRITUAL WALFARE. INDEED!!!!
We need both,our system is rotten because we are still using the one put in place by our colonial masters which was designed for siphoning our wealth to Britain,its got alot of loopholes,ZRA should be given constitutional powers which will prevent political intervention.
Their is too much political interference,the minister is suppose to wait for ZRA carry out its investigation,the explanation given here just proves that Vandeta will not be punished.the USA IRS (ZRA,Zambia)has penalize credit sussie a whopping $2.6 billion for aiding some companies on Tax evasion and credit sussie has agree to pay.please note no political groaning from either political parties.
Unless the transcript I got was wrong.I want to differ with the Minister . because the chap said from the time to got the mine it has been making a return.not what mr yaluma is saying. There is the problem.He the minister is eating well and people are still suffering then he goes to defend a selg proclaimed lair.guys this is a joke.we might as well let Clive Chirwa go back and continue with his profession.
The last thing we are waiting to hear is that Vedanta has pulled out of the country after amassing huge profits.
we are only left with scars of pits and dumps to show that great mining activities has been taking place in Zambia. meanwhile poverty level keeps on sky rocketing.
why not just shutdown the mines if they are not making any profit to the nation and its people?.
nine yrs is too much time, by now vedanta plc should have complied with its committement or atleast saying that they are more than halfway. because as much as they maybe telling stories about reinvesting all its profits back into the mine, they have been pocketing alot of it and mind us, we are doing business with these guys elo business nama story si viyendelana. Ba minister, we have faith in you and believe its time you put a mechanism or structure and a deadline in place while the copper prices are still good not just saying ati will see that they comply meanwhile, there is no method or plan to see that all that comes into reality. and when that is done, even make it public for tansparences sake and so that we know how things will be done not just claiming things. lets walk the talk
We all know how things work in Zed. KCM will simply oil the minister’s hands and it is a done deal. Only fools dwell on what politicians tell them…….welcome to Zambia.
There and then ends the story. If a lion roars just know it will not catch its prey, just scares preys so that it can sleep soundly. Lets wait any see.
coming to the issue of nationalization, its true GRZ is in no capacity to nationalize the mines, in that we may not have the much needed qualified personnel but most important, its the platform that we lack which is not good as Africa’s largest copper producer. myself and any well meaning and patriotic zambian, world like to see atleast 50% plus of those mines being properly run by the GRZ if we are to see our country;s economy grow and reduce dependance on donners as aswel as avoid such debate we are engaged in at the moment because someone mocked us publicly. hence, the question ot the moment for both the government and those who are aspiring to be, should be answering is “HOW YOU ARE GOING TO CREAT A PLATFORM AND PROVIDE QUALIFIED ZAMBIAN PERSONNEL SO THAT IN THE NEAR FUTURE, WE BE…
TO NATIONALIZE AND RUN OUR MINES IN AN EFFECTIVE WAY’ not pointing fingers and claiming this and that, or we told you…… this is what we were saying. whats past is past apa momba, amenso kuntanshi.
Appeasement policy has never worked any where.I as a Zambian,I chose not to understand you Mr minister and rest assured am not voting for you come 2016.We can’t afford to continue loosing our wealth to foreigners just because we currently have no capacity to manage our own natural resources. Our problem in Zambia is that we are so preoccupied with short term effects or results.Yes kicking Vandeta may cause a few upsets here and there.But in the long run the benefits will be massive.I can’t believe the minister is trying to sooth the mining companies in his speech as if it is the government that has offended them.These multinationals have ill motives. Vandeta should be punished and follow ups made on other culprits as well.
Okay, sold out and closed. After Sata chased KCM CEO like a dog, you are now talking about dialogue? Why cant the govt come out as strongly as they did when KCM wanted to layoff it’s employees? No one is thinking long term here. What good will a mine do if all its mineral wealth goes to India? The logic behind saving jobs, and losing billions of dollars in the long term is flawed. If the mine is as profitable as the clip suggested I dont think it will be unfair of the govt to revoke the mining license because of tax evasion. Why can’t we protect our own? The govt can do better than this.
Appeasement policy has never worked any where.I as a Zambian,I chose not to understand you Mr minister and rest assured am not voting for you come 2016.We can’t afford to continue losing our wealth to foreigners just because we currently have no capacity to manage our own natural resources. Our problem in Zambia is that we are so preoccupied with short term effects or results.Yes kicking Vandeta may cause a few upsets here and there.But in the long run the benefits will be massive.I can’t believe the minister is trying to sooth the mining companies in his speech as if it is the government that has offended them. These multinationals have ill motives. Vandeta should be punished and follow ups made on other culprits as well.
Appeasement policy has never worked any where.I as a Zambian,I chose not to understand you Mr minister and rest assured am not voting for you come 2016.We can’t afford to continue losing our wealth to foreigners just because we currently have no capacity to manage our own natural resources. Our problem in Zambia is that we are so preoccupied with short term effects or results.Yes kicking Vandeta may cause a few upsets here and there.But in the long run the benefits will be massive.I can’t believe the minister is trying to sooth the mining companies in his speech as if it is the government that has offended them. These multinationals have ill motives. Vandeta should be punished and follow ups made on other culprits as well.
With that the PF Govt has closed the Talk on the revelations about profits at KCM freely given to the public by the CEO himself. He freely and openly told us of the $500m and $1b the company makes annually. But the PF Govt insists on telling us the difficulties KCM has! So forget about those investigations by Govt. The story is closed! What a people we are??!!!
someone has swallowed the hook already we cannot do that balabalabala
you mean all those intelligent enginners from UNZA and CBU cant run these mines? Whats the purpose of the School of mines at UNZA if we cant manage our own mines?
Do use wrong terminology to confuse people. There is no nationalization here, because the Manawasa sell is not valid. Who gave you a legal opinion that it was a valid sale? Therefore if the sale was not valid, if is just a matter taking back the asset to the rightful owners – Zambians. As for those excess liabilities over assets that is again is a result of your corruption and inability to monitor anything, for which again you will be charged with treachery against the Zambian state and its people. Let me be clear property rights are not just for the so called investors but the Zambian people as well. We will hold you accountable for these crimes regardless of how long it takes to get justice. Tell you so called Chikwanda to come out in the open and stop hiding.
What we are saying is that we never gave Mr. Mwanawasa or indeed any to transact in that reckless manner. There was no referendum on this matter. Never did we give you PF government authority to behave in the useless manner your have been giving away our national wealth.
All the flaws & answers are in what Jack Kalala (former special assistant to Mwanawasa) has said. Why is this Govt ignoring windfall tax discussion. LPM did not just sell but also introduced windfall tax. Why are only recognizing the sale & not the W. Tax? Why can’t u even discuss increaing shareholding as an option? PF, U ARE FIRED!!!
LET US BE VERY HONEST HERE. INDIANS AND CHINESE CANNOT RUN MINES PROFITABLY WITH ACCOUNTABILITY. I KNOW THAT THESE TWO ARE GREAT NATIONS AND THEY HAVE BEEN SUCCESSFUL IN MANY OTHER AREAS. FOR EXAMPLE INDIA HAS BEEN A GREAT SUCCESS IN THE WORLD OF MEDICINE AND PHARMACEUTICAL PRODUCTS. CHINA IS ALSO GREAT IN THE CONSTRUCTION INDUSTRY. BUT BOTH COUNTRIES HAVE A POOR TRACK-RECORD WHEN IT COMES TO THE MINING INDUSTRY. YOU CANNOT COMPARE THEM WITH CANADA, BRITAIN, AUSTRALIA, USA OR EVEN SOME GOOD SOUTH AFRICAN MINING FIRMS. I THINK WE NEED TO GIVE MINING INVESTMENTS TO COMPANIES COMING FROM NATIONS WITH GOOD TRACK-RECORDS IN MINING. NOT THE CHINESE AND THE INDIANS.
2016 mwaitaya ba PF!! No vote from us the minersm.we voted for you so tht we could bé liberated we are worse off than in the MMD era.
These people you are protecting have just come to destroy. At the time you would have woken up you would have found that mining has ended. They will not honour their commitments wasnt that commitment as baank guarantee given earlier in the year?? This is May check the liabilities no movement just getting worse.
No primry development happening at the mines, do mines looking at growth behave like them?
Ala twacul paafula!!#Bring back our wealth##
the same guy who refused to disclose the contents of the report on the losses of KCM….
rotten to the core 🙁
There is a saying in Bemba ” mumbwe ukulila linshi pali uko ashintilile”. That kind of arrogance speaks volumes and the gentleman knows where he is leaning. If we Zambians are looking up to the PF government to get us a fair share of our mineral wealth we are wasting our time. Either we go our own independent way or we patiently wait for someone like Dr.Mwanawasa to ascend to the presidency. The question with the later option is ‘ for how long and will the copper still be there when that time comes?’
We do not need another corrupt thug like Mwanawasa. Your ignorance is unbelievable. That Mwanawasa bought papers at unza, to cheat on exams when he was a student at UNZA. Good riddance to bad rubbish. Never again shall Zambia be led by garbage. It is a fact that his cavendish quality PHD was not his work but written for him(lol the chikopo). It was what academics and great scholars call a nonsense PHD.
You can all talk and make noise. In Zambia nothing works………………
This Indian man is laughing at us.
It means he is free as govt is siding with him.He must have oiled the palms…….
viva HH
I sincerely respect Mr Minister, who is also a sound professional and has been consistent that all mining companies must comply with regulations and pay taxes/duties . In the recent past a entire team of ZRA along with Expert committees have audited mining companies and have not yet established any fraudlulent activity at KCM and therefore as Zambians, we are making a Mountain of a Mole Hill.
Lets all focus on development Agenda for the country and avoid petty politics and mis interpreting an NGO’s subverted antics.
One interesting thing about Zambians is how we love to pull ourselves down…if it was a zambian who had made such a statement, where would he bé today? Being harassed by ACC the entire govt would have thrown all thier weight at such. But because its an indian you want to behave like bwana nsungeni? For whose benefit? If your hands have been oiled too bad come 2016 we will see you being humiliated and harrassed like a criminal. Learn to do what is right at the right time.
The pla that govt should bé devising with Vedanta now is how will they pay pack the liabilites. They took over KCM when KCM had money in its account. They should leave KCM with money in the account. Settle liabilities in next 12months and leave the mine with ZCCM-IH.
We are too dull to reclaim what belongs to us period. They will continue fisting on our foolishness. Arguing over a straight issue. As usual. Corruption at play. YALUMA adya kudala and other BIG people may have received their CUTS while we watch like bakaponya. My foot!
I meant “FEASTING”
Warnings from the government of Zambia are always rhetorical, inept and a clear sign of weakness. A dog that bites does not bark at the enemy; it just attacks. There is no legal framework for you to warn and caution. We expected an announcement from ZRA about the punitive measures to recover tax. And you cannot continue using the same tax model for an industry that it prone to fraud. Tax should be based on production records and market prices; the rest they can sort themselves. Who ever makes loses, can leave. Mr Yaluma, why are our hearts so black that we cannot see sense in getting what belongs to the people? Do you believe you and your PF colleagues will live on kickbacks for 200 years? What about your future generations?
The Indian business men you find in Zambia are corrupt. Elsewhere in the world you may find an Indian investor with integrity but not in Zambia or Africa at large. Only the lowest calibre of investors are found in Zambia. Standard of economic investment need to improve in Zambia. Look at what happened with banks(indo zam, finance,etc) that had Indian business men at the helm. Many brilliant Zambians who built strong business were financially ruined because of those so called Indian business investors. Meanwhile the culprits responsible for liquidated banks, escaped to India with millions of dollars stolen from honest Zambian business men.Integrity and corruption do not mix. It is a fact Argwal using child labour for business in India.These investors need to expunged.