The South African High Court has today, Tuesday, granted Vedanta Resources an urgent interdict halting the liquidation of Konkola Copper Mines (KCM) which it owned via 79 per cent shareholding until a final determination through arbitration.
Vedanta Resources, which had previously been sponsoring stories about how unprofitable it was to run KCM, has surprisingly now launched a legal battle for a mine that made it suffer ‘losses’.
Through this push to have KCM back, Vedanta has contracted international organizations such as Euromix, a South African institution, to be the mine’s economic research attack dog in the issue of the KCM liquidation.
And with the South African court’s ruling, Vedanta feels it has won the legal battle over KCM when behind the scenes, the investor is clearly not interested in having the assets of the mine as it has already made the profits it needed out of it. This was confirmed by the boastful comments made by its chairman, Anil Argawal, who bragged that $500 million was being made out of the country’s biggest mine every year.
This was the starting point of the anger the Zambian government felt towards the investors of KCM, who later neglected the mine and forgot about the agreement made to keep it afloat. The government has justly made efforts to claim the ownership of the mine following this breach.
But KCM has employed Euromix and others to paint a bad picture over the liquidation process. Vedanta has further sponsored an economic impact study on liquidation of Vedanta’s assets in KCM, which will be carried out by Euromix.
A recent Op-Ed titled “SA MUST PAY ATTENTION TO DAMAGE ZAMBIA HAS DONE TO ITS MINING INDUSTRY” was published by South Africa’s Business Live newspaper written by Tokollo Matsabu, the Research and Engagement Specialist at Euromix. In this article, Matsabu branded the current process by the Zambian government to find another investor in Konkola Copper Mine as odd, and “deeply damaging for investor perceptions of Zambia as a copper mining investment destination”.
“The forced liquidation process of KCM, which is backed by the government, and which was launched by ZCCM Investment Holdings — the state-owned mining company that holds a 20% stake in the mine — is odd…While the matter has largely been fought in Zambia, it is now before the high court in Johannesburg where Vedanta, which has restarted large-scale zinc mining in SA, is asking for the liquidation to be halted and for international arbitration to be started in Johannesburg. Vedanta has invested $3bn in Zambia over the past 15 years to bring the mine to account and to build a new smelter,” Matsabu wrote in the Op-Ed that was sponsored by Vedanta Resources.
From Matsabu’s advice to the South African government that they must avoid taking over assets of mines owned by foreign investors should there be a disagreement, it is clear that he is pandering to foreign interests that want to launder themselves from the wrongs committed in implementing the mining agreement that existed between Vedanta Resources and the Zambian government. Any country that values its mineral resources would have done exactly what the Zambian government has done to protect its mineral wealth from investors that care less. The story of Vedanta’s attitude towards KCM operations is in public domain as several stakeholders – mine unions, workers and communities – backed the government’s decision to terminate the agreement that existed with the investor.
But Vedanta quickly sought the urgent order in South Africa to prevent KCM from being wound up, claiming that the dispute should be subject to arbitration, which cannot happen as the government is currently looking for a new investor. This is clearly a ploy to delay the process to find an alternative investor in KCM because whether or not it gets back the KCM assets is not priority on the list of what Vedanta wants to do in Zambia.
Additionally, Vedanta recently used South African lawyer Peter Leon to write an article in Financial Times on the ongoing liquidation of KCM, but Leon failed to disclose that his law firm, Herbert Smith Freehills, is being paid by Vedanta. This is highly unethical.
Source: Zambia Reports