Vedanta suffers legal setback in Zambia
The mining company Vedanta Resources owned by Indian tycoon Anil Agarwal, has suffered a major setback in its legal battle with the government of Zambia. Today a judge in Lusaka ruled the company could not take part in the proceeding to wind up its Zambian unit Konkola Copper Mines although it was granted leave to appeal against the ruling, which is being closely followed by the mining industry KCM, is 80 percent owned by Vedanta, with the other 20 percent being state controlled by the Zambia consolidated Copper Mines Investments Holdings.
Zambia is currently struggling with significant financial difficulties; struggling with high debts and shrinking foreign currently reserves. Subsequently it has been seeking a great share of its natural resource endowment but its combative stance has rattled investors in the mining sector and could deter other companies from investing in the country.
For its part, the government has cited breaches of KCM’s operating license and its financial position as justification for its move to place KCM in liquidation. “The Zambian government has unfairly tried to exclude Vedanta from decisions about KCM’s future,” the company said in a statement, adding it would take other measures to fight the winding-up petition. “It cannot be right for ZCCM, the minority shareholder to pursue this process without the majority shareholder being heard. ” “ZCCM’s actions are a breach of the KCM shareholder agreement which requires a process of engagement on any disputes between the shareholders and, failing agreement, resort to international arbitration in Johannesburg.”
Vedanta has also addressed recent comments made by President Lungu, about plans to sell KCM. “Reports that President Lungu has said he expects talks with potential buyers of KCM to conclude within a month are deeply worrying. They imply that a decision to sell the assets was taken in advance of any Court ruling and without Vedanta being given the opportunity to be heard,” Vedanta said. “KCM is not for sale and Vedanta will challenge any attempt to sell the business without its consent.”