Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Vedanta Resources Ltd., owned by Indian billionaire Anil Agarwal, said it’s seeking international arbitration to resolve a dispute with the Zambian government about its copper assets in the country.
Zambia’s government this month began liquidation proceedings against Vedanta’s Konkola Copper Mines, after accusing Vedanta of lying about expansion plans and paying too little tax. The company says it is a “loyal investor” that’s spent more than $3 billion in the country since 2004.
Vedanta has sought to formally challenge the court decision and the matter will be heard on June 4
Vedanta notified state-owned ZCCM Investments Holdings, the minority shareholder in KCM, of a dispute under a shareholders agreement, it said in a statement on Friday.
“The shareholders’ agreement provides for disputes to be submitted to international arbitration in Johannesburg,” Vedanta said.
ZCCM-IH, which owns 20.6% of Vedanta’s KCM, on May 20 won a provisional order to liquidate Konkola — three days after President Edgar Lungu warned Vedanta of “divorce” as he claimed the company had lied to the country. The government said it moved to wind up the company to prevent its collapse and to protect jobs. Vedanta has sought to formally challenge the court decision and the matter will be heard on June 4.
Vedanta Chief Executive Officer Srinivasan Venkatakrishnan and Deshnee Naidoo, a company executive, on May 29 met Zambian state representatives in the capital, Lusaka, to discuss the dispute. The company was given the assurance that the government has not entered into any sale agreements with other parties regarding Konkola, according to the statement.
Companies including China Nonferrous Metals Co. and Eurasian Resources Group have expressed an interest in buying Konkola, three people with direct knowledge of the situation said. ERG said on Thursday it had not approached the government and has no interest in the company.
Zambian Mines Minister Richard Musukwa said Thursday the dispute with Konkola is “an isolated case” that should not be used to damage the southern African nation’s image.
“The case should instead be used as a signal to other mining companies not complying with the law to put their house in order,” he said in a statement.
Venkatakrishnan reiterated that the company is eager to resolve the dispute through negotiations with the government.
“It would make imminent sense that we have a discussion, a dialogue, a negotiation with the government so that we can resolve this in a win-win manner,” he told reporters on the phone on Friday.
(By Matthew Hill and Taonga Clifford Mitimingi)
