Zambia Hands disputed Copper assets back to India's Vedanta
- In Reports
- 04:23 PM, Sep 06, 2023
- Myind Staff
According to Zambia's mines minister, Paul Kabuswe, Zambia has reached an agreement to return control of Konkola Copper Mines (KCM) to Vedanta Resources, effectively resolving a longstanding dispute that began in 2019 when authorities in Zambia seized control of the mines.
Under this agreement, the Zambian government, which holds a 20% stake in KCM through ZCCM-IH, will permit Vedanta to assume operational control of KCM's mines and smelter. This decision came after Vedanta renewed its commitment to invest over $1.2 billion to boost production and settle outstanding debts, as stated by Minister Kabuswe.
To solidify these commitments, a revision of the shareholders' agreement is in progress, aimed at legally binding both parties to their respective obligations, as outlined by Kabuswe. The specifics of this agreement, including the reinstatement of the KCM board, are expected to be finalized within the next three months, the minister noted.
Tensions between Zambia and Vedanta, led by billionaire Anil Agarwal, had escalated when the former President Edgar Lungu's administration orchestrated the seizure of KCM assets and initiated liquidation proceedings in May 2019. The Zambian government accused the Indian company of failing to fulfill its investment plans aimed at increasing mining output.
This takeover had severely disrupted operations at KCM and led to protracted legal battles. Vedanta pursued legal remedies, including initiating arbitration proceedings in London to recover control of the copper assets.
"It is not a secret that the asset has deteriorated a great deal and the production output has substantially reduced," Kabuswe told journalists in Lusaka. "This is a very sad development for a national strategic asset of the country."
According to reports, an amicable agreement was reached as both parties decided to forego their court challenges in favor of negotiations. This development signifies a potential alignment with the objectives of Zambia's President Hakainde Hichilema to reduce the state's participation in the mining sector.
Zambia's government, aiming to triple copper production over the next decade, is actively seeking a new investor for Mopani Copper Mines.
A significant portion of the pledged $1 billion from Vedanta is expected to be directed towards the advancement of the Konkola Deep Mining Project, an underground operation that, despite housing one of the world's most abundant copper deposits, has suffered from a lack of investment.
Zambia's Mines Minister, Kabuswe, emphasized, "Underground operations have nearly been halted, and KCM certainly needs immediate recapitalization."
In addition to committing to invest $1 billion over the next five years, Vedanta has also stated in a separate announcement that it will disburse $250 million to local creditors, allocate $20 million for community projects, and implement a 20% salary increase for workers.
ZCCM, regarding the Konkola Deep mine, reported that it holds approximately 250 million tons of copper ore reserves, highlighting the longstanding anticipation in Zambia and globally for the proper development of this mine.
Image source- Reuters
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