MINISTER of Mines, Energy and Water Development Christopher Yaluma yesterday told Parliament that Vedanta Resources Plc has not complied with its commitment to inject US$397 million into Konkola Copper Mines (KCM) as foreign direct investment.
Mr Yaluma revealed in a ministerial statement that since Vedanta Resources acquired KCM, US$2.8 billion made up of internally generated funds by KCM, bank loans and finance leases was injected in capital projects which included the Konkola Deep Mining Project, concentrator expansion at Konkola mine, the new concentrator and the smelter at Nchanga mine.
He said when taking over KCM, Vedanta Resources committed itself to providing a bank guarantee of US$400 million towards the outstanding loans that KCM had on its books.
Mr Yaluma also said the forensic auditing of KCM has started and that this will be done to all mines in the country.
He said government did not take a step of nationalising Konkola Copper Mines (KCM) when it was found wanting because this could have sent a wrong signal that the investment environment in Zambia was unstable.
Mr Yaluma said nationalising KCM could have also been against Government’s policy of having a private sector-driven economy.
“Instead of rushing to resolve the issues surrounding KCM through nationalisation, Government has decided to engage KCM to ensure operations are turned around for the company to become viable to ensure a win-win situation for both parties,” the minister said.
He said reacting to concerns by nationalising KCM would be sending a wrong signal to potential investors that the policy environment in Zambia is unstable, a factor which may make the country a less favourable investment destination.
Mr Yaluma, however, warned investors in the mining sector that Government will not hesitate to take necessary action against any fraudulent activity to prevent loss of much needed government revenue and to save jobs.
He also said as at 30th September last year, KCM’s total liabilities of US$1.5 billion exceeded the current assets by US$123 million, and that consequently, KCM was unable to meet its obligations as they fall due.
And Vedanta Resources, the holding company for Konkola Copper Mines (KCM), says it has continued to invest and develop the mining industry in Zambia.
Vedanta Resources Plc chief executive officer Tom Albanese said his company has invested US$2.9 billion over the new copper smelter, three new concentrators, a tailings leach plant and new underground facilities.
“In the Zambian Copperbelt, at KCM, we continue to invest and to develop. Vedanta, we paid US$261 million to acquire a 79.4 per cent stake in KCM. We have invested US$2.9 billion over the last decade in a new copper smelter, three new concentrators, and a tailings leach plant and new underground facilities. We have re-invested all of our earnings back into the company,” Mr Albanese said in a press release.
Mr Albanese said this has supported the creation of 5,000 new construction jobs and in the meantime, salaries at KCM have more than doubled in real terms.
He said in support of wider economic development in the area, his company continues to expand the vocational technical college, which is one of the largest private sector facilities in the region.
Mr Albanese said his company has also paid more than $850 million in taxes and local rates.
“To add to this, we have spent US$120 million on local community initiatives in areas including malaria prevention, sustainable agriculture, school, clinics and community health care,’’ he said.
Mr Albanese said it is the technical reasons that have delayed the ramp-up of copper production after these massive investments.
He further said Vedanta Resources is committed to KCM and to Zambia, adding that his company has a 50-year vision for KCM and opportunities in the Copperbelt as copper and cobalt anchor for Vedanta Resources’ future African growth.
Zambia Daily Mail