The Zambian government says lack of cash has forced it to close operations at Konkola Deep Mine.
Ministry of Mines Permanent Secretary Barnaby Mulenga said the standstill at Konkola Deep, a high-grade underground pit that also contains cobalt, was triggered by a shortage of funds to develop new mining areas.
The lack of capital is also curbing output at other operations of KCM which was placed under provisional liquidation in 2019 after the government alleged Vedanta lied about expansion plans and paid too little tax.
The production setbacks at KCM come as copper surged back above $10,000 a ton on Wednesday, with the reopening of major industrial economies sparking a commodities rally.
Mr. Mulenga said production at Konkola Deep may only resume after the resolution of a legal arbitration with Vedanta opens the way for new investment.
“This demand for copper will only get higher and the sooner these issues are resolved there is still an opportunity to exploit this resource,” Mr. Mulenga said.
“This is a giant which is sleeping and we remain positive that it will be mined at some point.”
Mr. Mulenga said KCM’s current challenges result from Vedanta failing to complete underground works that would have allowed more ore to be extracted from Konkola Deep.
Mr Mulenga said the flagship mine requires most of the $1.2 billion needed to turn KCM around.
Vedanta, which has denied the government’s allegations, said it was “saddened” to hear about the production halt at Konkola Deep.
The company said it had invested more than $1.7 billion in KCM and had planned to spend a further $1.5 billion to make the operations profitable.
Last month, employees of more than 30 contractors at KCM stopped work and staged protests over workers’ grievances.
The mounting problems at KCM highlight the political risks as President Edgar Lungu’s government seeks a greater share of mining revenues ahead of elections this year.
While Zambia’s copper production rose to a record last year, that didn’t prevent the nation from defaulting on its external debt.
Chimbwi no plan 🙁
At the time when copper prices have surged we have a corrupt PF govt wasting our resources & opportunities because greed and just luck of foresight of its visionaryless ECL.
Instead of reinvesting funds from KCM on mining operations, lungu and PF are using KCM as a cash cow to dish out free money to Zambians , trying to bribe them…….
There is more to life than money. We want ownership of these resources even if it comes at the cost of missing out on high prices of copper for a few months. The long term benefits of national ownership outweigh short gain.
There is more to life than money. We want ownershlp of these res0urces even if it comes at the cost of missing out on high prices of c0pper for a few months. The long term benefits of national 0wnership outwelgh short gain.
Do we really have a government in Zambia?
Leave PF in the same as a corpse, come back later and the corpse is pregnant
As long as Milingo Lungu is that mine no one will take you seriously. Running a mine isn’t as easy as forcing a third term. It’s far much easier to defeat Hichilema in an election that it is to run a mine. So the PF must get that into their thick heads. Don’t take politics to the mines. This is a very bad signal, we await an update on Mopani. People of Chingola and Chililabombwe must brace for more difficult times
Powerful point, KZ. Those condemning this move are shortsighted. When we had high prices and foreign ownership, we couldn’t even build hospitals or roads for the ballooning population during the Mwanawasa years.
Government cannot be blamed on this one.We kept on saying the investors we’re cheating and making huge profits which they were externalising.This was false as all receipts were deposited locally,but we were hell bent on running the mines with no investment capital.
We are to blame
The government responded by getting the mines which we had failed to run as we had no resorces to invest in the past.
Pf government at work
THE PROBLEMS AT KCM WHERE SELF INFLICTED AND I SEE NO REASON WHY COMPLAINTS ARE BEING RAISED. UNDER UNIP IT WAS CLEAR THAT GOVT HAD NO CAPACITY TO RUN MINES SUSTAINABLY. VANDETA RESOURCES GOT THE MINE FOR A SONG AND ALONG THE WAY GOVT WENT TO SLEEP AND ONLY REALISED THAT THE COMPANY WAS UNDER PERFORMING MEANTIME THE SO CALLED INVESTORS HAD MADE A RIPOFF. PRICES OF COPPER AT ALL TIME HIGH AND THIS COUNTRY WILL NEVER REAP THE FULL BENEFITS. I WONDER DRC WITH ALL ITS CORRUPTION AND INSTABILTY IS MANAGING TO BENEFIT FROM ITS MINERAL RESOURCES. NOW THERE IS KAMOA MINE COMING ON BOARD AND INSTEAD OF ZAMBIA TAKING ADVANTAGE OF KAMOA PROXIMITY TO KAMBIMBA BORDER POST IN MWINILUNGA BY WORKING ON THE PROPOSED ROAD TO RUN FROM LUMWANA WEST TO KOLWEZI NOTHING IS BEING DONE. THAT IS A SHORT AND…
Did you guys just plegerise the Bloomberg article??!
If PF failed to pay bond interest what else can they run?
These failed PF government must go!
PF must go this year!