Vedanta has once again pledged to invest more than $1.2 billion to improve output and pay off debts, and the government, which holds a 20% share in KCM through ZCCM-IH, will let the business to restore management and operation of KCM’s mines and smelter, Kabuswe said.
To make the commitments made by both shareholders legally binding, a shareholders’ agreement is now being revised, Kabuswe said. The minister stated that the agreement’s legal terms and the KCM board’s restoration will be completed within the next three months, as seen in a report by Reuters.
After former President Edgar Lungu’s administration staged the seizure of the KCM assets and forced liquidation in May 2019, accusing the Indian business of failing to meet plans to invest in growing mining output, relations between Zambia and Vedanta, controlled by billionaire Anil Agarwal, deteriorated.
Operations at the KCM were almost completely paralyzed by the forceful takeover, which also touched off long legal fights. Vedanta even filed a claim with a London arbitration court to reclaim the copper assets.
“It is not a secret that the asset has deteriorated a great deal and the production output has substantially reduced. This is a very sad development for a national strategic asset of the country,” Kabuswe disclosed to journalists in Zambia’s capital.
The deal was achieved peacefully after both sides decided against taking legal action and instead chose to negotiate. The agreement could be an indication that Zambian President Hakainde Hichilema is making progress toward some of his goals for reducing government participation in the mining industry.
The government is looking for a new partner for Mopani Copper Mines as part of its plan to quadruple copper production over the next ten years.
Vedanta has contributed $1 billion, most likely to be used to advance the Konkola Deep Mining Project, an underground operation that has lagged behind due to a lack of funding despite possessing one of the richest copper reserves in the world.
“Underground operations have nearly been halted, KCM certainly needs immediate recapitalisation,” Kabuswe said.
Vedanta stated in a separate statement that in addition to investing $1 billion over the next five years, it will also pay $250 million to regional debtors, invest $20 million in neighborhood initiatives, and increase employee compensation by 20%.
According to ZCCM, the Konkola Deep mine has copper ore reserves of roughly 250 million tons. “Zambia and the world have been waiting for a long time for this mine to be properly developed,” the company stated.