Vedanta Committed to Loss-Making Zambia Unit, CEO Albanese Says
Vedanta Resources Plc (VED), the mining and energy group focused on India, plans to operate in Zambia for 50 years even as that unit is making a loss and “some challenges remain,” Chief Executive Officer Tom Albanese said.
Vedanta has invested $2.9 billion since it bought a 78.4 percent stake in Konkola Copper Mines in Zambia for $261 million, Albanese said in a conference in London, the company said on its website. It has also paid more than $850 million in tax and “local rates,” he said.
“For technical reasons that have delayed the ramp-up of copper production after these massive investments, KCM has been loss-making of late and some challenges remain,” Albanese said today. “But to be clear, Vedanta Resources is committed to KCM and to Zambia. We have a 50 year vision for KCM and opportunities in the Copperbelt as our copper and cobalt anchor for our future African growth.”
Zambia’s Mines Ministry is working on a report to present to President Michael Sata on Konkola Copper Mines after Vedanta’s majority shareholder and Chairman Anil Agarwal was last month reported to have said the unit was bought for less than asking price. The Post newspaper of Zambia reported Agarwal as saying Konkola had given Vedanta a minimum return of $500 million annual in each of nine years since Vedanta bought it. The president earlier this month said the government will consider nationalizing mines that aren’t honest.
Vedanta, based in London, on May 16 said an activist posted a video containing part of Agarwal’s speech on to the Internet and it was used “negatively out of context.” Vedanta has taken “very little out,” Agarwal said in that statement.
Zambia is withholding about $600 million of value-added tax repayments to mines, saying they must supply import certificates from countries where their copper ends up. The miners say they sell the metal to traders and don’t know its final destination.
Vedanta is also studying whether it should build a smelter and refinery complex at its Rosh Pinah zinc and lead operations in Namibia, Albanese said.
“We will be looking to see how we can further leverage this economically in an area of high unemployment and a fragile arid zone biodiversity,” he said. “This becomes our zinc anchor in Africa.”
Vedanta, mainly a mine operator, gained access to India’s biggest onshore oilfield in 2011 after Agarwal bought a controlling stake in Cairn India Ltd. for $8.67 billion. Oil and zinc account for the biggest portion of capital investment as Vedanta bets on future demand, Albanese said last month.
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