Tag: Vedanta

Yesterday, Mr Hakainde Hichilema officially gave KCM back to Vedanta, a company whose owner mocked all of us Zambians for selling him our crown jewel of the Zambian mines for nothing.

His actions were particularly painful given that KCM retrenched thousands of workers, withdrew ZCCM social benefits for workers, introduced precarious subcontracting, refused to pay taxes and irresponsibly polluted the rivers on which the poor people of Chingola depend for drinking water and agriculture.

Vedanta’s human rights and environmental record is also a matter of great concern and a subject of global protests. This is the company that Mr Hichilema has given the company back to.

We agree that the liquidation process by the PF was flawed. However, it was justified given the behaviour of the company. Vedanta had a legal right to the company, but lost the social licence. The government should have leveraged this advantage to negotiate for more shares in KCM and the departure of Vedanta. This has not happened and will not happen.

However, this is unsurprising. On August 7 at Parklands Secondary School in Kitwe, Edgar Lungu accused Mr Hichilema of receiving bribes from Vedanta to support his campaigns, and of promising to give KCM back to Vedanta. Soon after forming the government, Mr Hichilema withdrew the matter from the courts and made endless promises about how and when they would announce the way forward.

Aware of the resistance from the public, opposition leaders and experts in mining studies, Mr Hichilema delayed the handover ceremony in the name of protracted negotiations. In reality, I would argue, there were no protracted negotiations but a strategic delay, as some experts have argued, to create enough hopelessness, anxiety, and uncertainty while presenting Vedanta as the only alternative.

Realising the arrogance of Mr Hichilema, the unions that forcefully supported KCM liquidation under the PF, gave in to Vedanta’s promises and began campaigning for Vedanta’s return. The question was no longer about the bad things that KCM under Vedanta did, but when the government would hand over the company to Vedanta. Some churches and youths amplified these calls on various radio platforms, including organised protests that were warmly welcomed by Mr Hichilema and the state-owned media at the expense of the anti-Vedanta protestors.

All this culminated in what we witnessed yesterday, the handover of KCM to Vedanta. This is a reckless and highly irresponsible decision. We cannot handle a company that in 2000 had estimated reserves of 280 million MT at Konkola, with an estimated productive lifespan of over 50 years, and in excess of over 53.9 million MT reserves at Nchanga Mine. With these kinds of resources, we do not need to postpone our debt to the future generation through debt restructuring.

Today, Vedanta is promising: US$1 billion investment in KCM development, US$250 million payment to all local creditors, US$20 million investment into the local community (CSR) every year through a special purpose vehicle¬ – a community trust, 20 percent increase in salaries for employees, and a one-off K2,500 payment to all employees.

Why now, after Vedanta failed to fulfil its commitment to inject US$397 million into KCM as FDI, but instead went on to use all the funds it generated within KCM towards capital projects, depriving the company of the necessary funds for operations and maintenance? This is the same company that bragged about making an easy profit of US$500 million each year from KCM, the mine purchased for a mere US$25 million while declaring losses every year, and refusing to pay taxes.

This is the same company that concentrated on the surface plant concentrator to process seven million tons of ore per annum it did not produce but purchased from other countries, effectively changing the philosophy of the business entirely from “mining” into a “treatment facility”. This is the same company that changed the design of the mine by positioning the shaft in the wrong place.

But that’s not all. This is the same company that led KCM into high indebtedness and the threat of insolvency. The total liability of the company as of 30 September 2013, stood at US$1.567 billion, exceeding its current assets by US$123 million. It was also under the threat of receivership from Standard Bank for defaulting on its US$700 million loan. Unconcerned, in September 2011, Vedanta prematurely recalled the US$500 million loan it had given to KCM earlier, which was supposed to have been repaid in 2012.

This is the same company that frustrated the government’s Business Improvement Plan (BIP) to increase production from 132,318 tonnes of finished copper in 2013, to 178,994 tonnes by 2017, resulting in a further decline in production to 86,585 tonnes.

Today, this is the company that Mr Hichilema has given back the crown jewel of our mines to amidst an escalating high cost of living. This has happened at a time when the promised price reduction of mealie-meal from ZMK150 to ZMK50 has culminated in more than ZMK300 per 25 kg bag; fertiliser, fuel, and so on.

We are saddened by this reckless decision and we want Zambians to ask Mr Hichilema the following simple questions:

• Whose interests are you serving?

• To what extent can you argue that Mr Lungu was wrong?

• Why have the so-called negotiations been silent when you promised transparency?

Fred M’membe

President of the Socialist Party

Arthur Schopenhauer once said, “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

We said it, and Mr Hichilema and his corrupt puppet regime ridiculed and violently opposed our perspective on the issues that were surrounding the situation at KCM. But here we are again in the same situation they ridiculed and violently disputed when we raised the alarm.

It is now evident that they were merely trying to silence the voices of truth on this issue so they could be heard and seen as the only ones who can do what is best for the people of the Copperbelt, in particular the people of Chingola and Chililabombwe.

We repeat what we have said before; that the return of Vedanta at KCM after its Indian owner Anil Agarwal parted with US$200 million, endorses the betrayal and disrespect Mr Hakainde Hichilema has for the people on the Copperbelt.

This particular move has a revealing effect on what type of a leader Mr Hichilema is and how he views and treats the people on the Copperbelt – with low value.

By this decision alone, Mr Hichilema has spat in the face of the people of the Copperbelt, especially the miners, who braved the meandering queues to cast their votes and put him into office.

Below are the articles we published on this issue in July this year.

VEDANTA’S AGARWAL TO GET BACK KCM AFTER PARTING WITH US$200M

After parting with US$200 million, Vedanta Resources plc’s 69-year-old Indian owner, Anil Agarwal, is assured of getting back KCM, which he lost control of in a Zambian government initiated liquidation order in 2020.

Agarwal acquired KCM in 2004 in a transaction that had an aggregate value of approximately US$270 million, comprised of a cash consideration of US$48.2 million for the 51 per cent stake, a commitment on the part of Vedanta to fund cash flows in KCM to an aggregate limit of US$220 million, and an agreement on the part of Vedanta to contribute US$1 million towards the cost of a feasibility study of substantial deeper level resources associated with the Konkola mine (containing estimated resources of around 250 million tonnes at 3.8 percent copper), to be undertaken by December 31, 2006.

In August 2021, while addressing miners in Kitwe, the then President of the Republic of Zambia, Mr Edgar Lungu, claimed that he had received a report that Mr Hakainde Hichilema was soliciting US$300,000 from Vedanta, promising to give them back KCM once elected. An accusation, which Mr Hichilema vehemently denied.

On April 25, 2022, during a media briefing at State House, Mr Hichilema dismissed media reports suggesting that the government planned to give back KCM to Vedanta as falsehoods.

But on May 9, 2022, Mr Hichilema U-turned stating, “Vedanta and ourselves have agreed that we suspend litigation,”

Going by the sequence of events and inconsistencies in the statements, especially on the part of Mr Hichilema, we demand that he comes clean on the Vedanta issue. What is going on? The Zambian people deserve to know the truth and how decisions have been arrived at in this matter.

Fred M’membe

President of the Socialist Party

In the same month of July, we again guided as follows:

HICHILEMA HAS BETRAYED THE COPPERBELT ON VEDANTA

The return of Vedanta at KCM after its Indian owner Anil Agarwal parted with US$200 million, endorses the betrayal and disrespect Mr Hakainde Hichilema has for the people on the Copperbelt.

This particular move has a revealing effect on what type of a leader Mr Hichilema is and how he views and treats the people on the Copperbelt – with low value. By this decision alone, Mr Hichilema has spat in the face of the people of the Copperbelt, especially the miners, who braved the meandering queues to cast their votes and put him into office.

As usual, Mr Hichilema has made known to the Zambian people that the poor masses of this country are nowhere near the equation, and as such deserve no place, value, or respect from his government. Like we have always said, Mr Hichilema is here to protect mining transnational capital and not the working masses. And we shall validate our standpoint stated above by highlighting the facts that led the Zambian government to initiate a liquidation order in 2020, so that citizens can see and judge for themselves.

Under Vedanta, KCM faced various operational difficulties, which included:

1) the mine failed to meet its financial obligations to the workers thereby subjecting them to poor working conditions,

2) the mine failed to honour its debts with contractors and suppliers,

3) the mine was highly indebted and threatened with insolvency, to the extent that as of September 30, 2013, KCM’s total liability stood overwhelmingly at US$1.5 billion, surpassing its asset base by US$123 million. This situation definitely made it unfeasible for the mine to meet its financial obligations. For this reason, KCM defaulted on its US$700 million loan signed with Standard Bank. By the way, this particular loan was secured on the KCM assets,

4) Vedanta failed to live up to its pledge to inject a sum of US$397 million foreign direct investment in the mine but resorted to diverting funds it was generating locally to other ventures thereby choking the mine and leaving it with no resources to inject in its operations,

5) Vedanta lamentably failed to operationalise the Konkola Deep Mining Project despite making numerous pledges and commitments over the same, and,

6) Vedanta never invested in its own equipment. It was merely sub-contracting its works. This made it extremely expensive to run the mine.

Above are just some of the many reasons the Zambia government repossessed the mine and opted to find another investor. Now, with all that we have stated above, we ask a question: which principled and decent leader would surrender back such a key national asset to a dishonest investor like Vedanta?

Clearly, Mr Hichilema is a selfish and showboating politician. But all this won’t end well. It will soon catch up with him because Zambians are not fools. Already the atmosphere is one of exhaustion. People are fatigued of his lies, inconsistency, and self-serving attitude.

Let him know that this country is way bigger than him and so he must stop playing with people’s livelihoods and the country’s future by dishing out key national assets willy-nilly like sweets in a market parlour.

Fred M’membe

President of the Socialist Party