VEDANTA Group chief executive officer Sunil Duggal says KCM remains an important asset to Vedanta and Zambia and today’s news of its split is both highly concerning and not in line with due legal process.
Vedanta Resources Holdings Limited and its parent, Vedanta Resources Limited has regretfully noted that despite ongoing legal proceedings and matter being subjudice, the Provisional Liquidator is continuing with its previously outlined plans to split and restructure the KCM Plc.
According to a statement, Vedanta was firm in its view that a split would be an illegal act and remains committed to returning to KCM and working on an investment roadmap up to US $1.5 billion for development of KCM as world class integrate.
“As such, Vedanta will act within its rights both in Zambia and internationally to contest this move by the PL and ensure that its interests in KCM are fully protected,” it stated. “The two units, being the mine and the smelter, are clearly designed to work as one integrated structure, and as such it is Vedanta’s belief that a split of the assets will inevitably result in a substantial loss in revenue for the Zambian state and its people, as well as the long-term erosion of the individual assets’ value.”
Duggal stated that since Vedanta Resources became a shareholder in KCM in 2004, it has invested over $1.7 billion in KCM’s mining operations to establish it as a world class copper mining and metals company underpinned by strong sustainable development practices.
He stated that more than $900 million has been invested on developing the Konkola Copper Mine and increasing the mine life to 2030 and beyond, and over $450 million was invested on a new smelter at Nchanga.
Duggal stated that the smelter was specifically designed to treat the Konkola and Nchanga concentrate and recover maximum copper from the concentrate.
He stated that there would be a significant decrease in the value of copper extracted if the high-grade concentrate from Konkola was sold to other smelters in Zambia.
“Similarly, there is no other smelter in the country which can recover the cobalt present in the Konkola and Nchanga ore body and thus produce the valuable cobalt alloy,” Duggal stated.
He stated that Vedanta remained strongly committed to KCM, its operations and employees, local communities and the government of Zambia, just as it had been over the past 15 years.
Duggal stated that this future commitment includes providing significant financial and technical support to KCM to stabilise current operations as well as further developing the assets to allow for a successful turnaround of the business, as outlined in their Financial Letter of
Support submitted to the KCM board of directors and the Zambian High Court on August 16, 2019.
Duggal said the investment community must remain conscious that any investment in a potentially split asset would be deemed inappropriate.
“Vedanta as a majority shareholder of KCM remains committed to KCM, its employees, the surrounding communities and Zambia and will unwaveringly continue to pursue its legal rights. As an integrated asset, KCM is world class, however, in two parts we believe the value of the asset will be severely compromised and its value for the people of Zambia will be diminished significantly,” stated Duggal.