By Chimwemwe Mwanza
A new Service Level Agreement (SLA) has been drafted, signatures signed, and the ink has all but dried. Barring any last-minute hurdles, the four-year skirmish which has captivated Zambia’s mining industry and diminished the value of Konkola Copper Mines (KCM) – one of Zambia’s biggest copper mining assets will draw to a close.
It’s only a matter of time before Vedanta – whose operating licence to run KCM and Nampundwe Mines was revoked in May 2019, makes a return to Chingola. Since Vedanta’s ejection, KCM has been in business rescue – a decision that has inflicted much pain and economic hardship on Chingola residents – whose livelihood is hugely dependent on local mining supply networks and opportunities. Could this be a moment that long suffering Chingola residents have been yearning for? It’s hard to tell but the incandescent rage directed at the Indian owned commodities giant by the Zambia public is indicative of a hostile reception awaiting Vedanta. Instead of a triumphant return, its comeback is likely to be a more subdued affair – given an evocative and bitter record of its tenure as KCM’s resident operator.
Put more bluntly, Vedanta’s propensity to flout licensing conditions is legendary – part of which is reason for KCM’s high indebtedness which almost rendered the company technically insolvent. Its pollution of Mushishima river which is Chingola’s only source of fresh water is another issue still etched in the collective memory of Chingola residents. Add these grievances to a false narrative peddled by the previous government and used as justification for its ejection from Zambia, Vedanta has a tough sell convincing a restive business community of its noble intentions to contribute to Zambia’s economic trajectory.
Yet, amidst a strong opposition to its return is a section of the local business community that is
sympathetic to Vedanta’s cause. Some spurious justifications aside, they argue and emphatically so
that there are many legal fora and business platforms at which purported breaches to the SLAs in
question could have been addressed without resorting to drastic action. On evidence, KCM should
not have been placed into business rescue in the first place. The argument that this decision was
nothing but a political project which in the end served interests of a politically connected few has
credence. Hence the former regime had no point in spinning a yarn about ‘empowering Zambians’
through such recklessness.
That the previous government lost all civil proceeding lodged by Vedanta in various international fora of arbitration further validates this argument. Let’s contextualise this viewpoint further. Four years since it was placed in business rescue, is KCM better off now than it were prior to that fateful decision. Certainly not. To the contrary the company is in a far worse position than it was in 2019. How has this decision benefited Chingola residents or the Zambian fiscus? And most important, who thus far has benefited the most out of the decision to oust Vedanta from KCM?
Simple as these questions are, the answers somewhat betray a naked truth to the real motive for placing KCM in business rescue. And some of the answers to this jigsaw may be lurking somewhere in the voluminous affidavits before court – in a case playing out between the state and KCM’s former liquidator Milingo Lungu. Milingo is strenuously fighting for his immunity to be restored so he can starve off prosecution for possible crimes he may have committed while serving as KCM’s liquidator.
While the Milingo vs the State matter is subjudicate to public commentary, this does not stop lay-men from asking a few but troubling questions. Just why is Milingo putting up such a spirited fight to have his immunity against prosecution restored? Simple, he is merely exercising a constitutionally enshrined right. In a more euphemistic parlance, could he be privy to information regarding where some of KCM’s dead bodies may be buried? It’s a speculative guess especially in the absence of such a pronouncement or determination by a court of law. Shouldn’t he be given his day in court to air his side of the story? He doesn’t think so which is why he has chosen to dance on a legal pin head.
Vedanta rightfully owns KCM
Could government have opted for other solutions than handing this asset back to Vedanta. We can
cry a river, but facts won’t change. Vedanta rightfully owns KCM. They didn’t steal but paid what
they considered a fair value for this asset and to which the then government agreed. Disposing this
asset to any company other than its rightful owner, could have gravely impacted the fiscus. In the
absence of a tangible alternative from detractors, this is the most sensible action. Besides there had
to be a threshold beyond which government could no longer tolerate further erosion of value and
asset stripping of this world class asset.
In fairness, Chingola residents and Zambians in general deserve far much better than being reduced to spectators to a seemingly endless legal squabble. And never mind the uproar this decision has caused, returning KCM to its rightful owners has also averted a drawn out and costly dispute that to date has only enriched a professional caste of looters. Lest we forget, the same government that ejected Vedanta from Zambia enabled this same company to exercise a call option deed signed with Zambia Copper Investments – which is government’s investment vehicle in KCM. This paved the way for Vedanta to raise its equity in KCM to 79.4%.
The question then becomes, how was a purported errant investor allowed to increase their shareholding in this crown jewel granted they had been in breach of several SLAs? And who do you blame for this? At best, this fiasco speaks to a lack of systematic and monitoring controls by officers tasked with ensuring that investors commit to and honour their SLAs. You can’t have controlling officers sleeping on duty and then conveniently chose to adopt kamikaze solutions to a dispute as complex as this one. As such, both the Ministry of Mines and the Treasury were complicit in exacerbating KCM’s woes.
Does Vedanta’s imminent return signal a capitulation of sorts by this government? Politicising what on paper seems a sensible solution to a drawn-out crisis is duplicitous especially if one hasn’t yet encountered that awful stench of poverty characteristic of Chingola and by extention neighbouring Chililabombwe. If you dare argue about the frightening levels of poverty in these two towns, ask the two respective parliamentarians, Chipoka Mulenga and Paul Kabuswe – who ironically is the mines minister.
In effect, Vedanta’s return signals two positives – first of which is the restoration of property rights to a company that was genuinely robbed off its asset. Critically, investors that have been reluctant to bet on Zambia granted uncertainty in the mining regulatory landscape will likely take a positive view on the country’s investment prospects based on this development. Let’s not be misled, Zambia requires massive Foreign Direct Investment (FDI) to develop its copper, cobalt, lithium manganese, nickel, gold and coal among other minerals in its basket of reserves. Even more important, could we be more considerate about the plight of the more than 5000 miners that have lost jobs since this company was placed in business rescue.
That said, should Vedanta be held to account for its past indiscretions? Absolutely, hence the need for the company to be given a second chance albeit with a leash around its neck so it can prove its worth. It’s unthinkable that it would spurn a second chance at redemption. Just a thought.
Mwanza enjoys reading, philosophy, history and politics. For sure, Liverpool will bounce back. For feedback, contact: [email protected]
