Zambia to take over Vedanta copper assets and bring in new investor

22 May 2019 (Last Updated May 22nd, 2019 11:36)

The Government of Zambia plans to take over Konkola Copper Mines (KCM), a subsidiary of Vedanta Resources, due to alleged mining breaches and introduce a new investor to manage the operation.

Zambia to take over Vedanta copper assets and bring in new investor
The Konkola Copper Mines tailings leach plant. Credit: KCM.

The Government of Zambia plans to take over Konkola Copper Mines (KCM), a subsidiary of Vedanta Resources, due to alleged mining breaches and introduce a new investor to manage the operation.

Zambia President Edgar Lungu said that the government has filed a notification of plans to strip KCM of ifs operating licence and take over Vedanta’s domestic copper assets. The state has also started looking for a new investor.

Lunga went on to say that the government would comply with the law in taking over Vedanta’s assets, and that other investors were keen to operate them.

The President’s spokesman, Amos Chanda, said that the action followed a number of breaches of the terms of the KCM’s mining licence.

“The government is planning to revoke KCM’s mining licence because of the breaches,” Reuters quoted Chanda as saying.

Last week, the president had threatened to “divorce” Vedanta and Glencore, two of the biggest employers in Africa’s second-largest copper producer.

Earlier this year, the government had increased royalties and unveiled a plan to overhaul the value-added tax system, souring the relationship between the government and the mining companies.

Lungu primarily targeted KCM in a weekend visit to Zambia’s Copperbelt province, where some companies are reportedly cutting production and firing workers.

Vedanta said that is has sought an urgent meeting with Lungu over the future of KCM and that it has not received formal communication from the government on the company.

In a statement, Vedanta said that it was its intention to continue to engage with the government in a constructive and transparent manner.

“The government has filed a notification of plans to strip KCM of ifs operating licence and take over Vedanta’s domestic copper assets.”

Vedanta said that the government, which also has a stake in KCM through a state mining company, “[is] fully apprised of and party to the circumstances of the company and major decisions that have been taken.”

Chanda said that a default notice had been issued to KCM in April 2018 over a number of breaches of the terms of its licence and it had not convinced the government it should keep the licence.

He said that three investors were interested in the asset, without naming them. He said that no formal negotiations had begun.

Chanda said: “Everything will be done within the law and that’s why we cannot name the interested investors until the separation process with KCM is done.”