The fate of one of Zambia’s leading mining companies, Konkola Copper Mines has continued unfolding with Government revealing various shortcomings on the operations of the copper producer.
Recently, the Government announced its intentions to audit the Vedanta Resources Plc owned KCM to establish various developments and commissioned a technical committee to study the company’s operations after the miner indicated various concerns including plans to lay off over 1,529 workers as it sought to mechanise its operations and remain sustainable in the metal producing industry.
However, after the conclusion of the audit by the taskforce, KCM has been found wanting in various aspects of its operations in Zambia with the Government revealing that the company had mismanaged its operations while at the same time failed to meet its production targets since it invested over US$2 billion in 2004.
Mines Minister Christopher Yaluma said some of the finding in the Audit Report indicates that the KCM mismanaged its operations while the company also failed to meet its production targets since its inception, ZNBC reported citing the minister as saying.
Yaluma added that according to the findings of the technical committee KCM had also lied that it had mechanised its operation system, to allow it retrench over 1,529 employees, a move that government has since blocked.
The company was also found, according to the committee’s report submitted to Government that about US$1.56 billion owed in liabilities were in excess of the company’s current assets valued at US$123.
KCM also was found to owe Zambian suppliers and contractors in debt amounting to 111-million U.S dollars of which 52 million U.S dollars has been paid out to contractors and suppliers as at time of audit, ZNBC added citing Yaluma as saying of the findings.
The Government has since asked Vedanta Resources Plc to guarantee US$400 million tap into the loans it owes clients. The Government has since set up a new production target for KCM which should be reported quarterly. Yaluma did not elaborate the new targets set for the company to meet.
Further findings, reveal that government is satisfied that KCM has put 250 casual workers on permanent basis and that government has also requested KCM to buy its own machinery as opposed to depending on out sourcing contractors in order to protect the operations of the mines.
Recently Vice President Guy Scott told Parliament that ‘very strange things’ are happening at Konkola Copper Mines (KCM) where the owners do not mind the company being declared bankrupt or placed under receivership to allow for the company’s liabilities to be taken over by government.
Scott stated that ‘it appears KCM has externalized huge amounts of money’, and that government is keeping a close eye on the company. The mining company has liabilities in excess of $1.5 billion, adding that the company has not paid its creditors and repaid bank loans, he revealed to lawmakers.
KCM also owes other mining companies monies for the processed copper concentrates which is also threatening the affected mining companies with reduced production and increased costs.
The Government also discovered that there are two companies known by the same name Vedanta, with the one owning KCM not being bound by the regulations of disclosure of the London Stock Exchange and the Financial Services Authority in Britain.
Scott stated that Vedanta is hiding information from government and that Zambia stands to lose billions of dollars if the country does not stand together and show that it will not be taken for a ride.