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KCM, Moxico sign smelter takeover deal

KONKOLA Copper Mines has signed an agreement with Moxico Resources Zambia Limited, which has been operating at the slug dumps at KCM, for the takeover of the smelting division following the company’s split into two subsidiary companies.

Last Monday, KCM acting chief executive officer Enock Mponda announced the so-called “reorganisation and restructuring” of KCM into two subsidiary companies effective February 1, 2021 – KCM SmelterCo Limited and Konkola Mineral Resources Limited.

He claimed that the decision was meant to increase efficiency, foster optimisation and boost business opportunities.

However, sources have revealed that KCM has already entered into an agreement with Moxico, a company that lacks capacity to run a mining business, to let it run the KCM SmelterCo Limited, and was scheduled to begin operations in January 2021.

The smelter is currently the only viable asset at KCM, and its planned sale to Moxico would lead to the closure of all the other pits.

“People might be deceived that the provisional liquidator is doing the right thing by splitting the company. The plan is to sell the smelter which is worth $700 million to $800 million yet the capacity of this Moxico company is only around $20 million. Without the smelter, nobody will actually invest in those mines, that is why the smelter is the only profitable thing and this is why he is selling this thing. And this is the same thing that happened to Luanshya, how Luanshya Mine was sold in pieces,” the source revealed. “This so called restructuring was already pre-planned and people must not be fooled. These people have sold the smelter which is worth $700 million to $800 million at peanuts.”

Moxico’s incapacity in the mining business was tested on its brief operations of Kalengwa (in Mufumbwe) which it failed to handle and ran it down to a point of the site looking like an abandoned mining site.

Vedanta Resources Holdings Limited and its parent company, Vedanta Resources Limited, have warned KCM provisional liquidator Milingo Lungu against splitting the mine business into two separate units.

The warning come in the wake of reports that Lungu is set to split KCM business into two and is considering divesting one or both of the units to unnamed, opportunistic and potentially ESG-challenged investors.

Vedanta Resources warned that such action would be in violation of the Court of Appeal’s recent ruling in its judgment dated 20 November 2020.

On 20 November 2020, Vedanta stated that the Zambian Court of Appeal delivered a judgment ordering that the winding up proceedings against KCM be stayed pursuant to section 10 of the Arbitration Act, 2000.

“Whilst it is the firm intention of the Company to find an amicable solution to the dispute with ZCCM-IH that is in the best interest of KCM and Zambia, Vedanta will act within its rights to ensure that its interests in KCM are fully protected and the provisional liquidator does not act in flagrant breach of the Court of Appeal’s decision,” reads the statement.

“Moreover, Vedanta will take all necessary steps both in Zambia and internationally to safeguard its interests in KCM should the provisional liquidator attempt to dispose of KCM’s assets to any third party who would axiomatically be party to an unlawful act.”

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