June 27 (Bloomberg) -- Vedanta Resources Plc, the mining company controlled by Indian billionaire Anil Agarwal, plans to spend $280 million to boost output at its Konkola Copper Mines Plc unit in Zambia, the African nation’s mines minister said.
Production will increase by more than a third by 2017 from 132,318 metric tons last year, Christopher Yaluma told lawmakers yesterday. Vedanta also agreed to pay $111 million to settle debt outstanding at Konkola and provide a $400 million bank guarantee, he said.
Pavan Kaushik, a Vedanta spokesman, and Shapi Shacinda, a Konkola spokesman, didn’t reply to requests for comment outside of normal business hours.
Relations between foreign mining companies and Zambia, Africa’s second-largest copper producer, are under strain as the government revises its mining law. Vedanta’s relationship soured after it said in November it would fire more than 1,500 workers. The country subsequently revoked then-Konkola CEO Kishore Kumar’s work permit.
The situation worsened last month after a video emerged on the Internet showing Agarwal talking about the low price he paid for Konkola and the profit it makes. Vedanta said in a May 16 statement that the comments from a speech in India were presented out of context.
The government conducted an audit of Konkola that found mismanagement and poor corporate governance, Yaluma said yesterday. Vedanta didn’t invest the $375 million it committed to when it bought its Zambian copper operations, the minister said.
Vedanta shares declined 0.5 percent to 1,121 pence at 9:52 a.m. in London, paring the gain this year to 20 percent.
Vedanta said in its May statement that Konkola has made $2.3 billion of capital investments in the past nine years while paying $73 million in dividends.
Vedanta Chief Executive Officer Tom Albanese said earlier yesterday the company is committed to Konkola, which is unprofitable, and to Zambia. Vedanta owns a 79 percent stake in Konkola.
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