Anil Agarwal’s Vedanta to regain control over Zambian copper mines

The Zambian Konkola Copper Mines (KCM) were placed under provisional liquidation in 2019 by the former Zambian President Edgar Lungu’s administration, who accused Vedanta of dishonesty about expansion plans and tax payments, initiating a series of legal battles. President Hakainde Hichilema, Lungu’s successor, ended a four-year legal battle over its ownership.

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In a statement on September 5, ZCCM-IH stated, “All disputes between the parties have been resolved and all proceedings relating to the disputes will be withdrawn with each party bearing their own costs.” The statement further added, “KCM board will be reinstated, and Vedanta Resources Ltd. will return to its previous role as the majority shareholder of KCM.”

The resolution is a significant victory for Agarwal, who has been battling to regain control of Konkola. It could also prove beneficial for the Zambian government if Vedanta follows through on its commitment to invest $1 billion over five years to complete an expansion. 

As part of the ownership and control transfer agreement, once Konkola’s board is reinstated, Vedanta has also committed to:

1. Paying $250 million to Konkola’s local creditors.
2. Allocating $20 million annually for local communities through a trust.
3. Implementing a 20% pay increase for workers.
4. Providing a one-off payment of 2,500 kwacha ($121) to all employees.

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The finalisation of this deal could contribute to the revival of Zambia’s copper industry. Zambian government projects that copper output will reach a 14-year low in 2023. Hichilema’s administration aims to achieve national production of 3 million tons annually by 2031, nearly quadrupling last year’s production.

Before the liquidation process began, Vedanta held a 79.4% stake in Konkola, with ZCCM-IH owning the remainder. The transition period for Vedanta to assume operational control of Konkola is expected to take about three months, according to ZCCM-IH Chairman Kakenenwa Muyangwa.

Zambian government will also re-establish its golden share in Konkola, granting it veto rights over the company, announced Zambian Mines Minister Paul Kabuswe as part of the deal. Kabuswe said, “History must not repeat itself” at Konkola, adding, “We want world-class standards.”

(With inputs from Bloomberg)

Updated: 06 Sep 2023, 07:53 AM IST