Zambia is watching the events at one of the country’s leading copper producers, Konkola Copper Mines (KCM) following reports that the company needs to be rescued by the state because it was loss making.
Vice President Guy Scott told Parliament on February 14 in a ministerial statement accessed by Mining News Zambia that the government is keeping a careful eye on Konkola Copper Mines and is concerned with various developments at the company.
Recent reports by a UK-based civil society group warned the Zambian Government against believing the perception created by Vedanta Resources that KCM was a loss-making company that needed to be rescued by the state.
However, Konkola Copper Mines (KCM), spokeswoman Joy Sata stated that the mining company does not want to discuss any aspect of the report claiming it was inaccurate and misleading.
During the Vice-President Question and Answer session and in response to various lawmakers, including Bwacha PF Member of Parliament, Sydney Mushanga, who wanted to know what the government was doing about the plight of KCM workers, Scott said there were a lot of strange things happening at KCM.
“We are keeping a careful eye on KCM. It seems a lot of money was taken out and the firm now has a lot of liabilities which are in excess of US$1 billion. They have not paid loans to banks; they owe a lot of money to companies. So there are a lot of all these strange things happening,” Vice-President Scott said.
He argued that KCM was hiding a lot of information from the government something he described as sad.
“It seems they are heading into the direction of receivership. It is a matter that concerns billions of dollars that we stand to lose. The owner of Vedanta is buying his own shares at the moment,” he said.
Scott told Parliament that Government is aware of a myriad of schemes that Konkola Copper Mines (KCM) is allegedly employing to siphon huge sums of money out of Zambia. He contended that KCM has had several “strange” things happening in its operations, ranging from liabilities to ownership matters.
“There are a lot of strange things happening around the operations of KCM and as stakeholders we need to protect ourselves from this,” he said. KCM has not paid some of the mining companies it owes and that the company planned to transfer some of its liabilities to Government with a call to Zambians to be on the lookout.
Scott further urged lawmakers to take keen interest in this development at KCM so that Government does not lose colossal amounts of money. In November last year, President Michael Sata threatened to revoke KCM mining licence if the mining giant proceeded with its plans to lay off 1,500 workers. President Sata had then warned the mining company against firing any miner.
In its 2013 report, Vedanta Resources Plc stated that it had made a profit of US$362 million from operations at its KCM unit in Zambia, which was a major contribution to its group operations in various parts of the world.
Zambia is Africa’s leading copper producer and is rated seventh in the world. The planned increase in copper producer to 1.5 million by 2016 spurred by the oncoming copper projects including the US$2 billion trident mine in north western province and the Sentinel Mine at the same unit are among some of the projects that have forecast to raise the country’s profile to being rated fourth best producer of the red metal