Vedanta founder Anil Agarwal to regain control of Zambian copper mines

Anil Agarwal, the founder and chairman of Vedanta Resources Ltd., has finally reached a settlement with the Zambian government over the ownership of Konkola Copper Mines (KCM), one of the largest copper producers in Africa. The deal, announced on September 5, 2023, marks the end of a four-year legal dispute that began when the former Zambian president Edgar Lungu ordered the liquidation of KCM in 2019, accusing Vedanta of breaching its license conditions and qunderpaying taxes.

The resolution of the conflict is a win-win situation for both parties, as Vedanta will regain its majority stake and operational control of KCM, while the Zambian government will benefit from Vedanta's commitment to invest $1 billion over five years to expand and modernize the mine. Vedanta will also pay $250 million to KCM's local creditors, spend $20 million annually on community development projects, and increase the salaries and bonuses of KCM's workers.

The deal is also a positive sign for Zambia's copper industry, which is vital for the country's economy and accounts for more than 70% of its export earnings. Zambia is Africa's second-largest copper producer after Congo, and has the potential to increase its output significantly with more investment and exploration. However, the industry has faced challenges in recent years due to low copper prices, high debt levels, power shortages, and policy uncertainty.

The new Zambian president, Hakainde Hichilema, who took office in August 2023 after defeating Lungu in a landslide election, has pledged to revive the mining sector and attract more foreign investment by improving the business environment and resolving disputes with mining companies. Hichilema, a former businessman and economist, has also promised to review Zambia's mining tax regime and renegotiate its debt with China.

The agreement with Vedanta is one of the first steps taken by Hichilema's administration to fulfill his promises and restore confidence in Zambia's mining industry. The deal also reflects Vedanta's long-term commitment to Zambia and its faith in the future of copper, which is expected to see a surge in demand due to its use in electric vehicles and renewable energy.

Vedanta is one of India's largest diversified natural resources companies, with interests in oil and gas, zinc, iron ore, aluminum, and power. It operates in India, South Africa, Namibia, Australia, and Zambia. Agarwal, who founded Vedanta in 1976 as a scrap metal trader, is one of India's richest men with a net worth of $3.5 billion. He is known for his ambitious acquisitions and philanthropic activities. He owns a 10% stake in Anglo American Plc., one of the world's largest mining companies.

Konkola Copper Mines is Zambia's largest integrated copper producer, with mines, concentrators, smelters, refineries, and tailings facilities. It has an annual production capacity of about 200,000 tons of copper and employs about 13,000 people. Vedanta acquired a 79.4% stake in KCM in 2004 from Anglo American for $48 million. The remaining 20.6% stake is held by ZCCM Investments Holdings Plc., a state-owned company that holds minority shares in several mining companies in Zambia.

The deal between Vedanta and ZCCM-IH is subject to finalization of legal agreements and regulatory approvals. The transition period for Vedanta to resume operational control of KCM will take about three months. The Zambian government will reinstate its golden share in KCM, which gives it veto power over certain decisions. The parties have agreed to withdraw all legal proceedings related to the dispute and bear their own costs.

Source:

(1) Anil Agarwal’s Vedanta to regain control of Zambian copper mines after dispute with ZCCM Investments. https://www.livemint.com/companies/anil-agarwal-s-vedanta-to-regain-control-of-zambian-copper-mines-after-dispute-with-zccm-investments-11693962781877.html.

(2) Vedanta founder Anil Agarwal to regain control of Zambian copper mines .... https://www.hindustantimes.com/business/vedanta-anil-agarwal-regain-control-zambian-copper-mines-101693963099778.html.

(3) India Billionaire To Regain Control Of Zambian Copper Mines. https://www.bqprime.com/business/vedanta-zambia-s-zccm-resolve-disputes-over-seized-copper-mines.

(4) India Billionaire Anil Agarwal’s Vedanta Regains Control of Zambia .... https://www.bloomberg.com/news/articles/2023-09-05/vedanta-zambia-s-zccm-resolve-disputes-over-seized-copper-mines.

(5) Vedanta Step Closer to Regain Control Over Zambia Copper Assets. https://www.bloomberg.com/news/articles/2023-07-16/vedanta-in-advanced-stage-of-deal-with-zambia-over-copper-mine.