GOVERNMENT has directed Konkola Copper Mines (KCM) to settle the US$44 million debt owed to Copperbelt Energy Corporation (CEC) and the power utility to immediately restore power supply to the Vedanta Resources Plc-owned company.
The directive comes after CEC started restricting power supply to KCM following a commercial dispute between the two companies.
This has forced KCM to suspend operations at its Nchanga underground mine after the mine flooded due to restriction of power supply.
Minister of Mines, Energy and Water Development Christopher Yaluma and Minister of Information and Broadcasting Services Joseph Katema said at a joint press briefing in Lusaka yesterday that the two companies should normalise their stand-off before the end of business yesterday.
“Government will not accept any further delay by the two companies to resolve this matter as it can have far-reaching humanitarian and economic consequences. It is disappointing that the stand-off has continued and now threatens the safety of workers at KCM.
“Government feels both KCM and CEC have not done what they were supposed to do. We, therefore, direct that with immediate effect, both companies fulfil their respective obligations since we want to see that before the end of the day today [Thursday],” Dr Katema said.
The minister said it is important for the situation to normalise in the interest of both companies and the country as a whole.
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When asked about consequences of not following Government’s directive by the two companies, Dr Katema said: “We don’t see any of them disobeying Government instructions.”
And Mr Yaluma said Government’s interest is to see power supply restored at KCM.
When asked if the directive would not set a bad precedent to other mining companies to stop paying for power supply, Dr Katema said Government’s intervention is in national interest.
“This is a business transaction between the two entities. We have come in because it borders on economic sabotage whereby production has stalled and also the safety of miners is threatened, so we don’t think other companies can like to be found in a similar situation,” he said.
KCM public relations and communications manager Shapi Shachinda said KCM is aware of the statement by Dr Katema and Mr Yaluma.
“As a responsible corporate citizen and key player in the country’s economy, KCM has already and will continue to honour its obligations to the CEC,” Mr Shachinda said
He said KCM is grateful for the guidance from the government.
“However, CEC has yet to restore power and this is affecting the future of operations at Nchanga,” Mr Shachinda said.
But CEC head of corporate affairs Chama Kalima said her company is ready to restore the restricted portion of power supply provided KCM discharges its obligations to CEC within the time specified in the ministerial directive.
On Wednesday, Mr Shachinda alleged that CEC had unilaterally made further restrictions of power supply which caused flooding at Nchanga underground mine around 23:40 hours on Tuesday.
But Mrs Kalima said KCM is attempting to malign CEC in the public eye and play victim while defaulting on its payment obligations.
Mrs Kalima said current restriction of KCM’s power requirements was agreed upon with KCM and no further reduction has been effected since.
“It seems KCM attempted to bypass the power restriction to the concentrator that CEC had effected last Saturday leading to a load ramp-up, which caused trip-outs on the system,” Mrs Kalima said.