Indian billionaire Anil Agarwal’s Vedanta Resources Ltd. and state-owned ZCCM Investments Holdings Plc have resolved their disputes over a Zambian copper mining complex, following a four-year legal battle over its ownership.
Former President Edgar Lungu’s administration placed Konkola Copper Mines under provisional liquidation in 2019, after accusing Vedanta of lying about expansion plans and paying too little tax. That sparked a series of court cases, culminating in his successor, President Hakainde Hichilema, seeking to resolve the dispute amicably.
“All disputes between the parties have been resolved and all proceedings relating to the disputes will be withdrawn with each party bearing their own costs,” ZCCM-IH said Tuesday in a statement. “Consequently, the KCM board will be reinstated and Vedanta Resources Ltd. will return to its previous role as the majority shareholder of KCM.”
The deal is a victory for Agarwal, who’s been fighting to regain control of Konkola. It could also be a win for the Zambian government if Vedanta makes good on its pledge to invest $1 billion over five years to complete an expansion. The world’s biggest miners are rushing to develop copper assets, as usage is projected to surge in electric vehicles and renewable energy.
As part of the deal to regain ownership and control, once Konkola’s board is reinstated, Vedanta also committed to:
- Paying $250 million to Konkola’s local creditors
- Spending $20 million on local communities every year through a trust
- A 20% pay rise for workers
- A one-off 2,500 kwacha ($121) payment to all employees
Finalizing a deal may contribute to reviving Zambia’s key copper industry, with the government projecting that output will decline to a 14-year low in 2023. Hichilema’s administration is targeting national production of 3 million tons annually by 2031, an almost fourfold increase from last year.
Before the liquidation process began, Vedanta held a 79.4% stake in Konkola, with the state-owned company having the remainder. The transition period for Vedanta to assume operational control of Konkola will take about three months, ZCCM-IH Chairman Kakenenwa Muyangwa said in a speech in Lusaka, Zambia’s capital.
Reinstating Vedanta as Konkola’s majority shareholder is “a substantial step in the right direction,” said Pushpender Singla, director of the company’s zinc unit. The government will re-instate its golden-share in Konkola, Zambian Mines Minister Paul Kabuswe said as the deal was announced. That would allow it veto rights over the company.
Lungu had sought what he termed a “divorce” from Vedanta in part because he accused the company of lying about plans to invest $1 billion in a long-delayed underground expansion.
“History must not repeat itself” at Konkola, said Kabuswe. “We want world class standards.”