Vedanta Resources is providing an update on the current situation affecting its Konkola Copper Mines (KCM) operations in Zambia.
Vedanta confirms that it is seeking to formally challenge the decision of the Lusaka High Court to grant an ex parte order appointing a provisional liquidator for KCM.
The liquidation application was brought against KCM by ZCCM-IH.
While Vedanta intends to fully defend its legal rights, Vedanta calls for the Government of Zambia to meet with Vedanta to come to a mutually agreeable solution to the current situation.
Vedanta’s legal representatives in Zambia yesterday served papers notifying ZCCM- IH, KCM and the KCM provisional liquidator of its intention to apply to be joined as a party to the hearing by Justice A.M. Banda-Bobo in the Lusaka High Court on Friday 24 May 2019.
The application to be enjoined is a critical step in the process so that Vedanta may file and receive documents relating to the proceedings.
Vedanta has serious concerns about the intentions of the applicants and the procedures that were followed by ZCCM-IH as a representative of government to obtain a provisional liquidation order on an ex parte basis against KCM in an apparent misuse of the legal process to date.
The company is relying on the protection of its rights under Zambian law and international norms.
Concerns include the following:
- The ZCCM-IH petition for winding-up of KCM under the Corporate Insolvency Act
deals with a broad range of issues relating to KCM not all related to the solvency of
the business. - ZCCM-IH is not a major creditor of KCM.
- ZCCM-IH and the Zambian government are represented on the KCM board, were
fully apprised of, and party to the circumstances of the company and major decisions
that were taken to manage KCM. - The provisional liquidation order was granted ex-parte, that is, without Vedanta, the
majority shareholder, being present and able to present its case. - Vedanta’s application for an ex parte order to be enjoined in the liquidation hearing
was rejected by Justice A.M. Banda-Bobo on the basis that this could only be considered inter partes (that is, with the other parties being ZCCM-IH and KCM, represented by the provisional liquidator, being present). - The powers granted to the provisional liquidator by the Lusaka High Court most closely resemble those that would be granted to a liquidator on the final winding up of a business.
In light of the most recent events, where a number of expatriate employees and contractors have been prevented from leaving the country, Vedanta calls for the Government of Zambia to ensure the unhindered passage of all employees or contractors to KCM inside, and into and out of the country.
Vedanta is a long-standing, loyal investor in KCM and in Zambia having invested over US$3 billion since the acquisition of the asset in 2004.
This has extended the gross resource base by 214 million tonnes, included the commissioning of the Konkola deep mining project as well as several studies into projects that could further extend the mine life and increase production.
The company employs nearly 13,000 people at its sites and operates clinics, hospitals and schools through its corporate social responsibility programme that amounts to over US$210 million since the acquisition.
KCM has contributed c.US$1.3 billion to the Zambian Exchequer in that period and continues to be the leading Pay As You Earn contributor in the country. For the year ended 31 March 2019, Vedanta provided KCM with financial support (including funding of loan repayments) of approximately US$500 million.
These significant financial and social investments combined with exponential rises in taxes, duties, fuel and power costs have placed an enormous and unaffordable burden on the company.
The most recent restrictions and duty on concentrates have negatively impacted the running of the smelter and the much-needed acid to run its operations.
In addition, the Zambian government owes the company more than US$180 million in VAT refunds which has made the situation even more challenging
(In light of the most recent events, where a number of expatriate employees and contractors have been prevented from leaving the country, Vedanta calls for the Government of Zambia to ensure the unhindered passage of all employees or contractors to KCM inside, and into and out of the country.) DICTATORSHIP, IDI AMIN HAD STARTED BLOCKING FOREIGNERS
They are trying to escape. they need to be held accountable. Dont be silly iwe!
They sold me the mine for a song $25 million dollars and am leaping $500 million dollars every year.Continue making money KCM to much bragging like a prostitute kkkkkkkkkkkkkkkkkkkkkkkkkkkkk.
Hope these PFoools and chipante pante govt of dull people went about the liquidation process properly, these dander heads don`t get any thing right, everything is too complex for their tu ma 0IQ brains that they have.
Please spare us with your lies. Can 3 billion dollars enter our banks without the effects being felt on the financial markets? Even if you spread it through the 15 years you have been here effects will be felt. You have made $7.5 billion net since you acquired kcm in 15 years according to your $500 million per year you make. You use this money to buy machines from your friends and spares which you could by from our people on the copperbelt you buy from your friends abroad and count it has Investment in Zambia. When under pressure you ask our people to supply you with spares and you don’t pay them. And these our people have a chain of families relying on that payment you are holding to in preference to paying your friends abroad. Investor my foot .
@AK, I don’t think this US$ 3 billion is actual cash injection into our economy. Its most likely equipment bought from abroad and imported into Zambia. It may also be management fees for expatriates and other services provided by Vedanta- The head office. But that’s my view
@SkyLab
The average Zambian is so DULL this is so difficult to understand…..
When this is all done Vedanta will have the last laugh… just like the Libyan´s had their last laugh.
Its so sad to see how the quality of thinking has just gone so low in a country which had everything going for..
Go look at how the education index of the country has fallen since 2000
I support GRZ on this , vendetta has reaped enough yet ploughed very little back
When it comes to money most Indians are not honest, some Indians even worship money. When Agarwal took over KCM he placed idols by the entrance and ordered workers to pay homage whenever they entered KCM. These chaps can even bewitch our President, why insist on the meeting when the matter is in Court?
The Zambian govt has not followed the correct procedure. We are losing this case, just like Lapgreen where we are still paying $480million.
We agree KCM are not doing what is right, but we are defeating ourselves by following shortcuts.
This does not look good.
The Problem is that this ECL Govt has no Respect for Legal and Constitutional Procedures. Vedanta if Domestic Route fails them can approach the International Arbitration Court for Shareholder Justice. The Zambian Govt will not only lose the Case but will be embarrassed Internationally and will have to pay Millions of USD in Compensation and Breach of Contract. The writing is on the Wall.
With a buffer zone in China we can safely make decisions with eyes closed