Mines and Minerals Minister Christopher Yaluma has revealed that Government has no plans to nationalize Konkola Copper Mines.
Mr Yaluma told a packed news conference in Lusaka Tuesday afternoon that Government will not go back on its policy to privatize the mines.
“We made the decision as a Government to put the mines in private hands and we have received some benefits on one hand and yes we have been ripped off on the other but we are not going to go back on our policy decision to private the mines,” Mr Yaluma said.
Mr Yaluma also admitted that the US$ 25 million that Vedanta Resources Plc paid for KCM was insufficient.
“It is true that they bought the mine for a song. We didn’t do our homework as a nation then and our audit of KCM operations has revealed that KCM did not bring in any fresh investment as promised, they just started reinvesting the same funds generated from sales proceeds against the original agreement,” Mr Yaluma said.
He also revealed that the audit conducted by a technical audit committee chaired by Dr Sixtus Mulenga showed that KCM was heavily in debt and faced threats of insolvency as at 30th September 2013.
“Following the announcement by KCM to retrench 1,529 employees, Government appointed a technical audit committee to audit the operations at KCM and recommend the course of action to be taken to preserve jobs. Contrary to the assertion by KCM that the planned mechanization of mining methods, the audit established that there was no plan linking the two. The problem was the mismanagement of the business,” he said.
He added, “The mismanagement was evidenced by threat to insolvency. As at 30th September 2013, KCM’s total liabilities of US$ 1.567 billion exceed the current assets by US$ 123 million. Consequently, KCM was unable to meet its obligations as they fall due.”
Mr Yaluma also blamed the company’s operational problems to the high turnover of Chief Executive Officers and high exodus of skilled Zambian professionals.
‘The main problem is that when Vedanta took over the mine, it did not have any business plan or a mining plan for the company.”
The Mines Minister disclosed that Vedanta Resources has up to now not complied with its commitment to inject US$ 397 million into KCM as foreign direct investment.
“Following the submission of the audit report, My Ministry engaged Vedanta shareholders and KCM’s top management to find means an ways of steering the company out of the desperate situation. Through this dialogue, a business plan to improve operations at KCM was developed and agreed upon by both parties,” he said.
“The business improvement plan targets to incrementally ramp up production from 132,318 tons of finished copper in 2013 to 178,994 tons by 2017. To achieve this, the company committed to inject US$ 250 million into production operations and US$ 30 million into smelter operations to improve flow of concentrates.”
On the video showing Vedanta Chairman Anil Agarwal mocking Zambia about the sale price, Mr Yaluma said Government will institute investigations into the matter using appropriate channels.
“Some of the issues that the Vedanta Chairman alluded to in the recent media reports especially touching on the company’s revenue and its profitability will require investigation by the Government. We as Government shall ensure that at the end of the day, the people of Zambia get a fair share of the returns from the mineral wealth,” Mr Yaluma said.