The enmity between Vedanta Resources and the Zambian government shows no signs of easing after Mines Minister Richard Musukwa, labelled the country’s mining sector a victim of criminal activity.
“Zambia is a victim and it needs support,” said Mr. Musukwa in a speech to delegates at the Investing in African Mining conference in Cape Town on February 5.
“We deserve African and international support to make sure Vedanta pays the price.”
Mr. Musukwa was referring to a dispute with Vedanta dating from May last year in which the state-owned copper company, ZCCM-IH, sought the liquidation of Konkola Copper Mines (KCM). ZCCM-IH has a 20% stake in KCM, which has productive capacity of about 100,000 tons of copper. Vedanta is the majority shareholder in KCM with an 80% stake.
ZCCM-IH argued at the time of starting liquidation proceedings that Vedanta had failed to deliver on its investment promises – a theme Musukwa ran with at the conference. He told delegates: “Investors must follow their [Vedanta’s] commitments.
“Vedanta Resources pledged $398m in a project and did not bring that. It pledged another $500m – it did not bring that. It pledged another $250m – they did not bring that money,” he said.
In an earlier interview with Miningmx, Vedanta CEO, Srinivasan Venkatakrishnan, said the attempt to wind-up KCM was tantamount to theft.
“It is a classic example of a hijacking,” he said.
“We woke up one fine day to find ZCCM-IH had applied ex-parte to wind up the company,” he said.
In Vedanta’s view, ZCCM-IH ought to have aired its complaints in terms of KCM’s shareholders’ agreement which allows for grievances and dispute resolution – a view supported by South Africa’s High Court which last year ordered ZCCM-IH to desist its winding-up order.
There have been attempts to resolve the dispute.
In September, President Edgar Lungu, agreed to negotiate with Vedanta following a meeting with the Indian firm’s executive chairman, Anil Agarwal.
However, the negotiations lost almost immediate momentum.
Since then, there have been reports that the Zambian government has been seeking to sell off parts of KCM, a development Vedanta has so far been able to foil.
It said in a recent statement that any third party attempting to buy KCM assets from the Zambian government could be breaking the law.
Undeterred, Mr. Musukwa today also criticised Vedanta’s track-record for poor governance at the Chingola facilities, one of KCM’s assets, that last produced copper in 2014.
KCM owed creditors and its failure to operate the mine was “criminality” as the company was locking up resources that other investors could exploit.
“Zambia is open for business and is ready to welcome well-meaning investors who follow the rule of law,” said Mr. Musukwa.
“Serious investors have no cause to worry.”
His comments were met with applause.
Venkatakrishnan argues that Zambia had made it difficult to operate profitably in the country prior to ZCCM-IH issuing a winding up order.
It had imposed new fiscal changes that helped dry up cash flow whilst a 300% increase in power tariffs further hurt KCM’s ability to fund itself.
“Vedanta has continued to bankroll KCM through all of this: some $500m has been invested in the mine until May last year when we were last in control.
It’s like being evicted from your house; you can’t even go into your house and visit it,” he said.
A crushing blow for KCM has been the government’s refusal to refund VAT that Venkatakrishnan calculated could be north of $160m.
“At some stage, a dialogue will take place,” said Venkatakrishnan.
“We are speculating, but it has to happen. There is a cash crunch coming which makes us hopeful,” he said of Zambia’s increasing inability to fund KCM.
Venkatakrishnan you cant run a dirty house and cant stay in a dirty house,if that’s is the way you stay in India not here in Zambia.KCM must be a clean house.We have had a lot of nosense and it is time for the govt to prove to the Zambians that these Indians must not come back Zambia if for Zambians if it means paying him let us do that we are running out of time and this case as taken long enough.Vedanta owes billions of dollars to contractors and suppliers of intalls that this is criminality,
These are our resources! It’s our land!. Why should foreigners benefit at the expense of zambians? Who the hell do these people think they are? This is 2021. It’s not 1899. Don’t mess with peoples livelihoods. Kz
Vedanta must be ashamed of what they have done to the Zambian govt and the people of Zambia especially chingola and chililabombwe.Vedanta had a very bad hidden plan according to the statement from Venkatakrishnan who said the Zambia govt as imposed fiscal changes that dried up cash flow and the increase of electricity taliffs this then shows that Vedanta as accepted that it as failed to run the company no wonder they introduced what they called ”OUT SOURCING” criminality at its best.Just bring new investors period.
Let’s run these mines ourselves. With gold on the cards, we will retain a significant amount of revenue for our coffers. Let’s not leave these fundamental economic issues to foreigners, the Arabs and South Americans own their resources; they don’t auction them to capitalists and expect handouts. LET US ALL SUPPORT GRZ ON THIS MATTER!!!
you tried that in the past what became of the mines then .Lets learn from history please
PF’s liquidators milingo Lungu is paid higher than CEO of vendada… Sabotage at its best!!!
Not only vendata is lamenting on PF’s broad day robbery of its own KCM, but also Zambians crying same victim of being robbed everything, including mukula and lethwes from game parks.
PF government steals even their wives underwears, to extent of Chinese start keeping records in their language just to hide something from hyenas.
Vendata will revamp KCM next year, help us coming.
Zambian citizen, we are failing to run zesco and you want to run the mines. Who owned the mines in the first place and that also with people who had proper qualifications? Why did we fail? Why did we decide to sell off in the first place? Let’s not go in circles. Lets just be strict on collecting all mining royalties and tax the mines prudently and let the income trickle down to the people of Zambia who are the true owners of the mines. As I speak the standard of zesco 10 years ago, service, personnel, vehicles, equipment which they used to use has gone down. Why?
Wako: when did ZESCO fail to be ran?? What I know is the old machines KK and UNIP left us cannot match the demand which has more than doubled. The lasting solution in sight is to build new ones then we can judge whether ZESCO is not being managed properly. Then, we have been collecting taxes from mines since 2004,why hasn’t the income trickled down??? How can income trickle down when we are shipping all the sales to other countries?? Trickle down effect only happens when all the money comes back into local banks, dum dum, like the Arabs do with oil or the Chileans with their copper. Bwana, you are colonised that’s why you believe we can’t run the mines!! That’s what the imperialists want you to believe so they can transfer all the funds for our minerals to their capitals.
We seem to be our own worst enemy. Minister Musukwa is busy crying to the gallery and getting applause, while we are failing to prosecute our case in the one place that matters, the courts! That is where we will either win or lose! Nor sloganeering! We need to grow up and be serious.
GRZ attitude towards running our own institutions leaves much to be desired. Until we have visionary leadership that clearly can spell out a clear road map where people can see where we are going and the benefits thereof, then, everybody would easily be mobilized to rally around our GRZ and pool all our human resources to push in one direction. The force of a people working with conviction for a common good can move mountains. Not where bena bamudyela masuku pamutu!!!
Vedanta, FQM, they all the same. I was told there was sopme evidence on Twitter that FQM was paying big big money to company to play ditry with zccm to beat us and steal from us.
We have no confidence in our selves and so how can we run our country,meaning even if we change the govt it will be the same we can not run this country better we maintain what we have than changing because this will be retrogressive to our beloved country.See what our friends have done in America,they have maintained so let us also maintain what we have.
But the USA has changed by bringing in an “outsider” who has drained the swamp, hence the positive economic growth. He’s negotiated new trade deals putting America first and slashed taxes. Here the MMD has crept in thru the back door and are in the driving seat. We need change, appoint cabinet outside parley so we hv more capable pipo not limiting ourselves to same crop of pipo.
*****
The minerals could be ours , but international law seems to be on their side.
The indians are predicting a cash crunch while habazoka is predicting good times.
I’m no economist , but hope PF have the foundaments right.
This is going to be another lap green saga.
These gangster’s are still groveling. Zambian minerals are sweet!
Are they daft. If they came back the locals would run them out. Sabotage. It’s over.