VEDANTA Resources has written a letter to Minister of Mines Paul Kabuswe, promising various progressive changes, in a bid to reclaim the mine.
In a letter dated May 5, 2022 Vedanta Resources chief executive officer Sunil Duggal said Vedanta and government needed to engage constructively in order to resolve the dispute between the parties.
“On 26 April 2022, you were quoted in the Zambian media as saying that if Vedanta were allowed to resume running Konkola Copper Mines (“KCM”), the government of Zambia would put in place strict conditions so that Vedanta conducted itself in a different manner than it used to in the past. These conditions would ensure that the communities of Chingola and Chililabombwe would directly benefit from KCM’s Corporate Social Responsibility Programs through the restoration of Vedanta’s Social License to Operate in the Copperbelt, with clear benefits to its co-shareholder, ZCCM IH, and a predictable income stream to the national treasury, as per normal business practice,” he said.
“Honourable Minister, at Vedanta we were very pleased to hear you advance the government of Zambia’s case in such a clear manner as we have always stated that Vedanta and the government need to engage constructively in order to resolve the dispute between the parties. The drawn-out dispute of the past 3 (three) years is not benefiting any one of KCM’s stakeholders and worse still, has seemingly led to the deterioration of the asset to the detriment of employees, communities and the national fiscus. Two months ago, a number of KCM union leaders called for the return of Vedanta to KCM on the basis of Vedanta’s investment commitment to the KDMP Project, rehabilitation of the mine’s infrastructure, increase of worker salaries and improvement in employees’ conditions of service.”
He said Vedanta was committed to utilise the smelting capacity and respected government’s vision to produce 3 million tonnes of copper on an annual basis.
“At that point in time, several local Zambian media houses reached out to us to ask for our response and we accordingly answered as follows: (1) Vedanta has already invested significantly in the development of KDMP. The project was launched in 2008 by the late president Rupiah Banda and production commenced in 2010. By May 2019, a sum exceeding USD973m had been spent on infrastructure development of KDMP. Vedanta is committed to invest an additional USD 1 billion towards capital mine development and other infrastructure to increase KCM’s integrated production from current 50kt to 100kt per annum (and further potential increase to 200ktpa in medium term). In addition to that, we commit to optimally utilise the smelting capacity to treat 100ktpa of custom concentrates to produce overall 300ktpa which represents 10% of the Country’s copper production vision. We respect the Government of Zambia’s vision to take the country forward and produce 3 million tonnes of copper on an annual basis,” Duggal said.
Duggal said Vedanta would implement a 20 percent salary increase across the board.
“(2) At the moment we have no certainty as to the state of the asset though our suspicion is that it has deteriorated. We shall have to deploy a technical forensic audit team to ascertain the condition of the asset and thereafter KCM will have to formulate a turnaround/rehabilitation plan which will have to be implemented with immediate effect. (3) We understand that the workers at KCM have received no salary increments during the past three years, save for the severance packages that were paid to them prior to the 2021 General Elections. Moreover, the workers’ conditions of service have remained static. We commit that upon our return we shall implement a 20percent salary increase across the board and an one off payment of K2,500 within 3 months of the return that after the technical forensic audit of KCM has been completed, we shall again review the workers’ conditions of service to ascertain whether there could be room for further adjustments,” Duggal said.
He said Vedanta was committed to investing in social infrastructure programmes in order to uplift the communities where KCM operates, which included hospitals, clinics, schools, and provide scholarships, among others.
“(4) Vedanta implements measurable, impactful Corporate Social Responsibility programmes wherever it operates be it in South Africa, Namibia or India. The recent government introduced Constituency Development Fund Decentralisation Strategy is also proving to be a useful guiding model on stakeholder involvement in project identification and implementation. Upon KCM’s return to the management of its Board, we shall, together with all relevant stakeholders, sit down to draw up a framework of cooperation and sustainable engagement for KCM’s future Corporate Social Responsibility programmes. Vedanta is committed to investing in social infrastructure programmes in order to uplift the communities where KCM operates. Specifically, we propose to support hospitals, clinics, schools, provide scholarships, livestock, and promote youth development programmes, training and sports development including football sponsorship. These programmes shall be established by a Special Purpose Community Trust which will be managed jointly by the mine and community,” he said.
Duggal said the company was committed to paying KCM suppliers who were owed as the company was aware that the provisional liquidator had not paid the majority of creditors during the last three years.
“(5) Vedanta understands that the Provisional Liquidator has not paid the majority of creditors during the last three years resulting in multi-fold increase in outstanding supplier and contractor liabilities. Vedanta is committed to paying to KCM suppliers (specifically small suppliers) up to USD 220 million which was due as on 21 May 2019 when the Provisional Liquidator was appointed. It is the intention of Vedanta to ensure that Zambian small businesses are prioritised in its supply chain. KCM will put in place a procurement program having identified appropriate Zambian small businesses, will avail them with support and medium-term contracts so that they can grow with KCM. The above commitments by Vedanta will be included in a Framework Agreement to be entered into between KCM, Vedanta, ZCCM-IH and GRZ. The agreement will be auditable on a bi-annual basis by an independent firm to verify all parties’ compliance with their commitments under the Framework Agreement,” Duggal said.
Duggal said the company was looking forward to engage with government and other relevant stakeholders on the conditions of Vedanta’s return to KCM.
“Honourable Minister, much of Vedanta’s innovation efforts in the mining value chain is not only focused on what we could do up-stream, eg KDMP further development and exploring to expand ore bodies at Nchanga and Konkola but also downstream, on the car battery and electric vehicle initiative that President Hakainde Hichilema and his Democratic Republic of Congo counterpart, President Felix Tshilombo launched in Lusaka last week. You may wish to know that Vedanta has just signed a MoU on the manufacturing of semiconductors, using copper metal, in India with our South Korean partners. We are putting on record our commitment to see how we could play our part in this initiative here in Zambia. We look forward to engaging will the government of Zambia, ZCCM IH and all other relevant stakeholders on the conditions of Vedanta’s return to KCM,” said Duggal.