Zambia agrees to return control of Konkola Copper Mines to Vedanta Resources
World
Zambia agrees to return control of Konkola Copper Mines to Vedanta Resources
LUSAKA (Reuters) - Zambia has agreed to return control of Konkola Copper Mines (KCM) to Vedanta Resources, mines minister Paul Kabuswe said on Tuesday, ending a row over the ownership of the assets that erupted in 2019 when authorities seized the mines.
The government, which owns a 20% stake in KCM through ZCCM-IH, will allow Vedanta to resume control and operate KCM's mines and smelter after the company renewed a pledge to invest more than $1.2 billion to increase output and repay outstanding debts, Kabuswe said.
A shareholders' agreement is being reworked to make the commitments from both shareholders legally binding, Kabuswe added. The legal details of the agreement and reinstatement of the KCM board would be finalised within the next three months, the minister said.
Ties between Zambia and Vedanta, owned by billionaire Anil Agarwal, soured after former President Edgar Lungu's government orchestrated the seizure of the KCM assets and forced liquidation in May 2019, accusing the Indian company of failing to meet plans to invest in increasing mining output.
The forced takeover nearly paralysed operations at the KCM and triggered protracted battles, with Vedanta mounting legal battles including approaching an arbitration court in London to recover 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."
The agreement was reached amicably after both parties abandoned court challenges in favour of negotiations. The deal could signal that Zambia President Hakainde Hichilema is meeting some of his targets to scale down the state's involvement in the mining sector.
The government, which seeks to triple copper output over the decade, is also searching for a new investor for Mopani Copper Mines.
Much of the $1 billion that Vedanta has pledged is probably targeted at advancing the Konkola Deep Mining Project, an underground operation which despite holding one of the world's richest copper deposits, has suffered from a lack of investment.
"Underground operations have nearly been halted, KCM certainly needs immediate recapitalisation." Kabuswe said.
In addition to committing to investing $1 billion over the next five years, Vedanta said in a separate statement it will also pay $250 million to local creditors, spend $20 million on community projects and raise workers' salaries by 20%.
The Konkola Deep mine holds about 250 million tons of copper ore reserves and "Zambia and the world have been waiting for a long time for this mine to be properly developed," ZCCM said.
