Konkola Copper Mines (KCM) Plc chief executive officer Christopher Sheppard says he remains in charge of the mining giant and intends to use his three-year contract at the financially struggling firm to turn around its fortunes.
KCM sources told News Diggers, Monday, that Sheppard had tendered his resignation to Vedanta Resources Limited after a fallout with group founder and chairman Anil Agarwal over recapitulation and a parallel reporting structure for the Chief Financial Officer.
Sheppard travelled to London last week in the company of Chief Financial Officer Venkatesan Giridhar where they went to present the KCM business plan for the 2019-20 financial year and a company turnaround proposal to Vedanta Group Chairman Agarwal.
The sources said a financial crisis had worsened at KCM since August 2018 when the Copperbelt Energy Corporation (CEC) restricted electricity supply to the mine, owing to an unpaid bill stretching over US$40 million, and Vedanta was not keen to approve a bail out plan.
“Since he joined the company, Sheppard was very committed and eager to turn KCM around, but Vedanta was not willing to approve his recapitalisation plan, and he also does have total control on finances. The problem is that there is a parallel reporting structure in our management. Our Chief Financial Officer, Giridhar reports not to the KCM Chief Executive Officer but to the Vedanta Chief Financial Officer. So, one of the proposals that Sheppard made was that this should be changed so that the KCM finance manager reports to the KCM CEO. We understand Vedanta objected to this request. Sheppard is saying, ‘how am I a CEO when I do not have the final say on financial operations?’That’s what is on the ground,” said the sources.
“In the meantime, KCM management has remained unpaid since last month, and local contractors are mounting pressure over non-payment for supplies. Only KCM employees who are under salary scale S1-5 have been paid. KCM S1-4 are unionised. KCM5S and above, have not been paid for April. The explanation that is given is that the CFO will authorise payments when he returns from London, so if Sheppard has not resigned, why is he not paying salaries?”
But Sheppard told News Diggers the verbatim below that he is on top on things and expressed his commitment to turning things around, adding “I’m here to stay.”
Question: We are just trying to verify a story surrounding your purported resignation from KCM. The basis of the enquiry is that we had some information from sources within KCM that had suggested that you had resigned over a fallout with Mr Agarwal.
Answer: Okay, so it’s not like I am sitting in South Africa or anything like that; I have got Eugene Chungu (KCM’s corporate affairs general manager) sitting at my desk with me, and just to give you some comfort that what you hear Eugene telling you is in actual fact the truth and nothing but the truth. So, the fact of the matter is, I retired from Anglo Gold Ashanti in South Africa as chief operating officer mid-March. On the 18th of March, I started work here as the chief executive of KCM. My wife joined me on the Thursday before the Easter Weekend; I’ve sold my house and cars in South Africa, I’ve left the dog with my son, and in actual fact we are now living on Nchanga Drive here in Chingola.
Q: So you are here to stay?
A: I have a three-year contract with KCM. But given that I am an expatriate from South Africa from a work permit point of view, and I would love to stay here a little bit longer. So, the first point to make is that, I am not just here as a ‘hired gun’ or mercenary or something; I have come because I want to be here. So, it is my intention to stay as long as it is at the pleasure of the Zambian government and Vedanta Resources. In terms of some rumours that were floating around, there’s elements of truth in what was said. The fact of the matter is that I did fly on Tuesday (April 30) through Johannesburg out to London and I met with my two senior management leaders being Sunil Venkat, he’s the group CEO, who I worked for when I was at Anglo Gold Ashanti; I actually joined Vedanta Resources because of Venkat being my new boss. And, yes, I met with the chairman (Agarwal) on Wednesday, Thursday and Friday. And the intent of those discussions was to create understanding around the KCM situation that we find ourselves in, and what assistance I need from the Vedanta Group. So, those meetings took place, they were fruitful; cordial; there were no arguments; there was no acts of retrenchments or threatening to resign or anything like that. I can honestly say that to you. I flew down to South Africa again on Saturday morning and caught the half past 8 flight two hours later through to Ndola, and I am safely back in Chingola. So, that’s my story.
Q: Thank you very much for clearing up the air, Mr Sheppard, In relation to Vedanta Resources’ business improvement plan; they had made a business improvement plan to recapitalise Konkola Copper Mines back in 2014. Do you have an update regarding the status of that plan?
A: First of all, I was not around in 2014. In all honesty, I cannot comment on those commitments in 2014. All I can tell you is that we have a very clear, turnaround plan for particularly Konkola Mine as part of KCM. We have a very clear plan in place and that’s the subject of discussions that we held with senior Vedanta executives in London this last week.
Q: Okay, then do you have a sense, as KCM CEO, that Vedanta Resources are ready to pump in the required liquidity needed to turnaround KCM?
A: Right, I cannot comment on that other than to say that, I am engaging with Vedanta Resources with a view to getting the necessary funding to give effect to the turnaround. How it materialises, it’s work in progress, and I cannot comment at this stage, Stuart.
Q: Then perhaps as a concluding remark, how confident are you that you can be able to ensure that KCM will in fact continue in its operations? We have seen a lot of developments regarding the 2019 mining fiscal regime, which has increased mineral royalties rates by 1.5 percentage points across all levels of the sliding scale, how confident are you that KCM will continue to remain in business?
A: I think we have a credible plan to turn this business around under the circumstances we find ourselves in and we are confident that we could actually make the change necessary. I wouldn’t want to comment in a public forum regarding fiscal changes, I wouldn’t want to get drawn on that if I may; it is what it is.
Q: Mr Sheppard, if you are not able to comment on the business improvement plan that was committed in 2014, do you have an estimated amount in terms of what is required to recapitalise KCM from your perspective?
A: It wouldn’t be appropriate to put that out in the public domain, and I hope and trust you can respect that, Stuart. We are very clear in terms of infrastructure work that needs to be done and we know what needs to be done in terms of backlog payments to critical service providers. That’s all I can say at this stage.
Q: Okay, Mr Sheppard, thank you very much for taking time of your business schedule. We understand you have back-to-back meetings, and we wish you all the best.
A: I am not resigning; there are a lot of people over here that look to me for leadership at the moment. And any unfounded rumours do not help my cause at this point in time.
Q: Thank you very much, we appreciate it.
A: Okay, cheers! Bye.
Sheppard was engaged as KCM boss on March 18, 2019, taking over from Deshnee Naidoo who unceremoniously left the company in September, having served only three months. After Naidoo left, KCM was plunged in a leadership vacuum with no official memo stating who would occupy the CEO position. Former Chief Operating Officer, Frank Russo-Bello (who resigned a week after Sheppard was hired acted as chief executive officer, alongside Giridhar, the Chief Financial Officer – but none was officially communicated as substantive head of the mining giant operation.