(5 minutes read)
· While Zambia is gearing to sell the copper mines it seized last year from the India based billionaire Anil Agarwal’s Vedanta Resources Ltd., the plan seems to be mired in legal hassles
· Arbitration between Vedanta and Zambia will proceed in London in January
· The copper mine, KCM, has attracted suitors from Turkey, Russia, the UK and Canada, who would jointly run KCM with state-owned ZCCM Investments Holdings Plc
While Zambia is gearing to sell the copper mines it seized last year from the India based billionaire Anil Agarwal’s Vedanta Resources Ltd., the plan seems to be mired in legal hassles. Reports suggest that it may act as a drag on attracting suitors to buy the plant.
Arbitration between Vedanta and Zambia will proceed in London in January. The Zambian government‘s allegation is that Vedanta lied about expansion plans and that way evaded the tax. The Konkola Copper Mines Plc, thus, went in the hands of a court-appointed liquidator. The likely protracted case may deter the investors fearing an end of the legal tussle may not end anytime soon.
In the meantime, Zambia is facing other major financial problems. The government has requested for a payment holiday for its US$ 3 billion Euro bonds since it is in the edge of a default. The drastic fall in international copper prices also came in the way of attracting investors. The copper mine, KCM, has attracted suitors from Turkey, Russia, the UK and Canada, who would jointly run KCM with state-owned ZCCM Investments Holdings Plc. Even if the copper prices go north, the arbitration procedures can delay a turnaround that could require investment of more than US$1 billion.
Going by the present trend, the arbitration case may not be concluded before early 2022. Therefore, the sale will have to wait till that time. Vedanta has expressed its desire to engage with the Zambian government in finding a solution to end the wrangle. Its investment in KCM is reported to be close to US$ 1.7 billion. The company also claims that it has paid all the taxes and nothing is outstanding.
Copper mining is facing severe problems in the Southern African country. The Zambian government earlier had a tiff with Glencore Plc over the commodity giant’s plan to deactivate its Mopani Copper Mines to weather the impact of the pandemic. As if to compound the situation, other copper miners have halted US$2 billion of planned investments because of a dispute over a royalty tax.
