Bailiffs pounce on KCM over another debt

Troubled Konkola Copper Mines, facing a US$44 million commercial debt with Copperbelt Energy Corporation has been embroiled into another problem.

This time, bailiffs have seizing assorted goods at its offices at Acacia House in Lusaka over a US$ million owed to another supplier of goods and services to the mine with 10 percent interest, as Government orders for a lasting solution to the impasse between the miner and power provider, Copperbelt Energy Corporation.

On 24 September, Bailiffs, acting on behalf of Mitchell Drilling International of Australia, ‘invaded’ its head office in Lusaka where they seized assorted office properties to try and compel the mining company to settle over K5 million (about US$1 million) the mining giant owes the Australian drilling company for services provided, the Post newspaper reported.

The Post, according to its findings, established that property belonging to KCM Lusaka offices situated on Thabo Mbeki road had been seized by bailiffs from the Sheriffs of Zambia which they found being loaded into two trucks. The property included office furniture and other operational equipment with assistance from Zambia Police officers, who arrived at scene in the morning.

“We have been ordered to execute this exercise and if the seized property will not be equal to the debt involved, then we will move to KCM headquarters on the Copperbelt,” one of the bailiffs is quoted as saying.

This operation follows KCM’s failure to pay for the drilling services Mitchell Drilling rendered after the two parties entered into a contract signed on June 27, 2008. According to the agreement, the paper added, the contract ran between June 2008 and November 2011during which Mitchell Drilling did surface drilling and reverse circulation at Konkola and Nchanga mines.

Mitchell drilling sued KCM in the Lusaka High Court for breach of contract and failure to settle the outstanding amount of 731, 546.31 Euros [ about K5, 830, 424] that had accumulated. On March 14, 2013, the Lusaka High Court entered judgment in favour of Mitchell Drilling International limited and Mitchell Drilling Zambia limited who were the plaintiffs in the matter ordering KCM to pay the said monies.

Nonetheless, KCM contended the High Court decision by applying for an order for stay of execution pending hearing and determination of the appeal in the Supreme Court.

On June 23, 2013, the High Court granted KCM the said order subject to the mining company paying the judgment sum of K5, 830, 424 into an Escrow bank account within 30 days from the said date, the paper stated.

However, KCM appealed against this ruling arguing mining operations would be affected should they pay the colossal sum as ordered. But last week on September 18, High Court judge Flavia Chishimba dismissed KCM’s conditional stay of execution and ruled that the mining company pays Mitchell Drilling the said outstanding amount with 10 per cent per annum interest.

Barely a day after the action by the bailiffs, the Government sought to intervene in to the saga between the two warring parties ordering them to find a lasting solution to the problem involving a commercial debt of US$44 million owed to the energy provider since April this year.

The Government has directed that the matter be resolved in national interest without delay with a directive to the KCM to resolve the debt problem while CEC was directed to restore full power supply to the mine therewith, according to the two ministers, mines and energy and water development Christopher Yaluma and his counterpart at ministry of information and broadcasting, Joseph Katema.

Yaluma and Katema on 25 Sept. directed that the ongoing tiff be resolved with KCM resolving the debt while the energy supplier, CEC should restore power to the mines with immediate effect.

This follows the energy provider restricting power to the mines by 10 percent since Sept. 20 because of the unresolved US$44 million, which has in turn affected operations at one of the largest copper and cobalt producers and Vedanta Resources Plc owned KCM.

The mining company contends that the restriction of power has forced the miner to shut down the concentrator and the Tailings Leach plant while operations underground have been halted with water sipping into the work places after CEC allegedly restricted power to the mine waiting payments.

Yaluma and Katema said at a joint press briefing in Lusaka Sept. 25 that the two companies should normalise their stand-off before the end of business day adding that the Government will not accept any further delay by the two companies to resolve this matter as it can have far-reaching humanitarian and economic consequences. It is disappointing that the stand-off has continued and now threatens the safety of workers at KCM.

Government feels both KCM and CEC have not done what they were supposed to do. “We, therefore, direct that with immediate effect, both companies fulfill their respective obligations Katema said.

It is important for the situation to normalise in the interest of both companies and the country as a whole. When asked about consequences of not following Government’s directive by the two companies, Katema said it was in order for any of the two parties to disobey the Government directive as it was being done in national interest, Katema added..

Yaluma added that Government’s interest is to see power supply restored at KCM and as to whether the directive would send wrong signals, said it would not.

“This is a business transaction between the two entities. We have come in because it borders on economic sabotage whereby production has stalled and also the safety of miners is threatened, so we don’t think other companies can like to be found in a similar situation,” he said.

KCM public relations and communications manager Shapi Shachinda regretted the action by CEC adding that the action had affected production at the mine and cost the company US$3.3 million and lost 482 tons of copper in production during the time the power was restricted.

“As a responsible corporate citizen and key player in the country’s economy, KCM has already and will continue to honour its obligations to the CEC,” Shachinda said.

However, sources at KM say power has not yet been restored at the miner and that suspended operations remain the same in anticipation that the two parties will resolve the matter amicably as sought by the Government.

CEC head of corporate affairs Chama Kalima said her company is ready to restore the restricted portion of power supply provided on condition that KCM does its obligations to CEC within the time specified in the ministerial directive.

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