STATEMENT BY THE MINISTER OF MINES AND MINERALS DEVELOPMENT, HON. PAUL KABUSWE, ON THE REINSTATMENT OF VEDANTA RESOURCES TO RUN KONKOLA COPPER MINES (KCM)
05 SEPTEMBER 2023
MULUNGUSHI CONFERENCE CENTRE
- MEMBERS OF THE CABINET COMMITTEE PRESENT
- MEMBERS OF THE TECHNICAL COMMITTEE,
- REPRESENTATIVES FROM ZCCM INVESTMENTS HOLDINGS PLC
- REPRESENTATIVES FROM VEDANTA RESOURCES LIMITED
- THE PROVISIONAL LIQUIDATOR
- MEMBERS OF THE MEDIA
- INVITED GUESTS
- LADIES AND GENTLEMEN
I WELCOME YOU TO THIS VERY IMPORTANT ENGAGEMENT, TO ANNOUNCE THE NEW DEVELOPMENT AT KCM SO THAT THROUGH YOU MEMBERS OF THE MEDIA, WE CAN APPRAISE THE NATION ON THE STRIDES THE GOVERNMENT IS MAKING TO RESUSCITATE KONKOLA COPPER MINES (KCM).
AS THE NEW DAWN GOVERNMENT, WE ARE DETERMINED AND FOCUSED ON REVITALIZING THE COUNTRY’S ECONOMY. WE HAVE BEEN WORKING ON VARIOUS INITIATIVES TO UNLOCK BARRIERS TO GROWTH AS WE BELIEVE THAT BELIEVE NATIONAL DEVELOPMENT MUST GO BEYOND GROWING THE ECONOMY BUT ENSURE THAT THE ZAMBIAN PEOPLE ARE AT THE CENTRE OF EVERYTHING IN ORDER TO TRANSFORM THEIR LIVELIHOODS.
THE NEW DAWN GOVERNMENT HAS ALWAYS BEEN COMMITTED TO BUILDING A RESILIENT AND SUSTAINABLE MINING INDUSTRY FOR THE BENEFIT OF ZAMBIANS. OUR MESSAGE HAS BEEN THAT ZAMBIA IS OPEN FOR BUSINESS, AND WE LIVE BY OUR INVESTMENT VALUES OF BEING TRANSPARENT, PREDICTABLE, CONSISTENT, AND FAIR AS WE CONDUCT OUR BUSINESS.
DISTINGUISHED INVITED GUESTS LADIES AND GENTLEMEN
IT HAS INDEED TAKEN US LONGER THAN ANTICIPATED TO RESOLVE THE IMPASSE BETWEEN ZCCM INVESTMENTS HOLDINGS AND VEDANTA RESOURCES SINCE MAY 2019. THIS IS BECAUSE AS A GOVERNMENT, WE TOOK OVER A KCM WHICH WAS ON THE VERGE OF COLLAPSE AND WE WORKED ROUND THE CLOCK TO NORMALIZE OPERATIONS AT KCM.
THE NEW DAWN ADMINISTRATION, WHILST IN OPPOSITION AND NOW IN GOVERNMENT, NEVER SUPPORTED NOR AGREED WITH THE LIQUIDATION OF KCM AS THE BEST SOLUTION TO WHAT HAD BESIEGED THE COMPANY. OUR BELIEF WAS THAT THE ACTION WAS ILLEGAL AND HAD CLEAR BREECHES OF THE SHAREHOLDERS AGREEMENT THAT PROVIDES FOR A DISPUTE RESOLUTION PROCESS IN CASE OF A DISPUTE BETWEEN PARTIES THROUGH ARBITRATION.
THEREFORE, FOLLOWING EXTENSIVE CONSULTATIONS WITH VARIOUS STAKEHOLDERS INCLUDING THE UNIONS, I AM HERE TO ANNOUNCE THAT WE HAVE FINALIZED THE NEGOTIATIONS WITH VEDANTA. VEDANTA WILL RETURN TO RUN AND RESUSCITATE OPERATIONS OF KCM AS THE MAJORITY SHAREHOLDERS ALONGSIDE ZCCM-IH.
LADIES AND GENTLEMEN
YOU MAY RECALL THAT ON 7TH SEPTEMBER, 2022, ZCCM INVESTMENTS HOLDINGS PLC (“ZCCM-IH”), VEDANTA RESOURCES LIMITED, VEDANTA RESOURCES HOLDINGS LIMITED (“VEDANTA”), AND KONKOLA COPPER MINES PLC’S (“KCM”) PROVISIONAL LIQUIDATOR, ENTERED INTO A WRITTEN AGREEMENT TO SUSPEND THE HEARING OF THE DISPUTES BETWEEN THE TWO PARTIES VEDANTA RESOURCES ON ONE HAND AND ZCCM-IH ON THE OTHER, TO PURSUE AMICABLE SETTLEMENT OF THE DISPUTES.
THE PARTIES ENGAGED IN DISCUSSIONS TO RESOLVE THE DISPUTES AND HAVE REACHED A SIGNIFICANT MILESTONE. AS PART OF THE RESOLUTION, 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.
CONSEQUENTLY, THE KCM BOARD WILL BE REINSTATED AND VEDANTA RESOURCES LTD WILL RETURN TO ITS PREVIOUS ROLE AS THE MAJORITY SHAREHOLDER OF KCM BASED ON THE FOLLOWING MUTUALLY AGREED CONDITIONS:
- A RENEWED FINANCING COMMITMENT TOWARDS INVESTMENT IN MINE DEVELOPMENT AND TO INCREASE PRODUCTION.
- AN INCREASE IN EMPLOYEES’ SALARIES AND A ONE-OFF PAYMENT
- AN INVESTMENT IN ROBUST AND TRANSPARENT ENVIRONMENTAL SOCIAL AND GOVERNANCE PROGRAMMES; AND,
- A SETTLEMENT OF LOCAL OUTSTANDING CREDITOR DEBTS.
ADDITIONALLY, GOVERNMENT’S GOLDEN SHARE HAS BEEN REINSTATED AS A SAFEGUARD TO ENSURE THE ASSET IS PROTECTED.
IN THIS REGARD, THE PARTIES ARE WORKING TOWARDS CONCLUDING REVISIONS TO THE SHAREHOLDERS’ AGREEMENT AND THE IMPLEMENTATION AGREEMENT ON NEW TERMS AS STATED, WHICH AGREEMENTS WILL BE LEGALLY BINDING ON THE PARTIES TO ENSURE THAT THE RENEWED COMMITMENTS ARE FULFILLED. WITH LESSONS LEARNT FROM THE PAST, THESE TERMS AND CONDITIONS PROVIDE ARE SAFEGUARDS TO PREVENT HISTORY REPEATING ITSELF.
THE NECESSARY LEGAL FORMALITIES AND PROCEDURES ARE ALSO BEING ATTENDED TO, TO ENSURE THAT ALL THE CURRENT DISPUTES AGAINST EACH OF THE PARTIES ARE FULLY WITHDRAWN.
DISTINGUISHED INVITED GUESTS, LADIES AND GENTLEMEN
IT IS NOT A SECRET THAT THE ASSET HAS DETERIORATED A GREAT DEAL OVER TIME, AND THE PRODUCTION OUTPUT HAS SUBSTANTIALLY REDUCED. THIS IS A VERY SAD DEVELOPMENT FOR A NATIONAL STRATEGIC ASSET. THE NEW DAWN GOVERNMENT HAS A VISION OF REALIZING 3 MILLION METRIC TONNES OF ANNUAL COPPER PRODUCTION IN THE NEXT 10 YEARS. WE HAVE MADE THIS VERY BOLD DECISION TO RESTORE NORMALCY AT KCM BY BRINGING BACK VEDANTA AND IT IS EXPECTED TO SIGNIFICANTLY CONTRIBUTE TO THE ATTAINMENT OF THIS TARGET.
IN THE 2 YEARS WE HAVE BEEN IN OFFICE, WE HAVE STRIVED TO CORRECT THE DAMAGE THAT WAS CREATED BY THE PREVIOUS ADMINISTRATION BY CONDUCTING DUE DILIGENCE ON KCM IN TERMS OF TECHNICAL AUDIT, ENVIRONMENTAL AUDIT, FINANCIAL AUDIT, AND PRODUCTION AUDIT AMONG OTHER ASSESSMENTS WHILE WE HAVE NEGOTIATED THE BEST DEAL WITH VEDANTA FOR THE BENEFIT OF OUR PEOPLE AND THE NATION AT LARGE.
IT IS THE DESIRE OF THE UPND ADMINISTRATION TO LAY THE FOUNDATION FOR FASTER, SUSTAINED, PRIVATE SECTOR LED GROWTH BY IMPROVING THE INVESTMENT CLIMATE. FAIR TREATMENT TO INVESTORS, THOUGH NOT AT THE DETRIMENT OF THE NATION, AND BUILDING CONFIDENCE AS MANY OTHER INVESTORS WOULD WANT TO COME AND INVEST IN ZAMBIA.
LADIES AND GENTLEMEN
VEDANTA HAS MADE A NUMBER OF COMMITMENTS THAT WE CAN ONLY URGE THEM TO FULFILL FOR THE BETTERMENT OF THE PEOPLE OF ZAMBIA AND THE COPPERBELT IN PARTICULAR.
WHAT IS CRITICAL IS TO RESUSCITATE THE KCM ASSET. AS YOU MAY BE AWARE, THE STATE OF KCM OVER THE LAST 4 YEARS, HAS BEEN DIRE. UNDERGROUND OPERATIONS HAVE NEARLY BEEN HALTED. KCM CERTAINLY NEEDS IMMEDIATE RECAPITALIZATION.
WE ARE THEREFORE CONFIDENT THAT VEDANTA WILL RUN THE MINE ACCORDING TO OUR EXPECTATIONS AND SET AND ACTUALIZE MILESTONES. WE EXPECT THE INVESTOR TO WORK WITH ZAMBIANS OUT THERE WHO WILL PLAY A CRITICAL ROLE IN THE COUNTRY’S MINING VALUE AND SUPPLY CHAIN. THIS WILL UNDOUBTEDLY ADD TO THE SUSTAINABILITY OF INVESTMENT.
AS GOVERNMENT, WE WILL CONTINUE TO SUPPORT AND APPRECIATE THE IMPORTANT ROLE THAT THE PRIVATE SECTOR PLAYS IN THE DEVELOPMENT OF THE MINING INDUSTRY AND WILL PROMOTE A COMPETITIVE, THRIVING, AND SUSTAINABLE MINING INDUSTRY.
LADIES AND GENTLEMEN INVITED GUESTS I THANK YOU ALL FOR YOUR ATTENTION.