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KCM takeover is against Mines Act, Vedanta will haunt govt – SinkambaBy Mirriam Chabala on 15 Jul 2019
Green party leader Peter Sinkamba says ZCCM-IH is not government but a company in which government is a shareholder, just like Zamtel, and as such, it has no legal backing to takeover Konkola Copper Mines from Vedanta Resources in national Interest.
And Sinkamba says the law is very clear that if government takes any action, the State Proceedings Act of the Laws of Zambia stipulates that that action taken by government in a court of law should be commenced by the Attorney General.
In an interview, Sinkamba said the action against Vedanta didn’t suit any of the three scenarios under which the government would takeover a private mine, and expressed fear that Zambians would soon be made to pay compensation to Vedanta Resources as a consequence of government actions to arbitrary take over Konkola Copper Mines (KCM) from its parent owners.
“We are a little bit confused with what is transpiring. On one hand government is claiming that it has taken action to repossess the operations of Vedanta at KCM. But when you look at the court papers, the litigants there its ZCCM-IH which had applied for liquidation. Now ZCCM-IH is not government, it is just a company in which government is a shareholder, like Zamtel. If Zamtel takes an action today, it doesn’t mean that government has taken action. If government takes any action, the law is very clear, there is what is called the State Proceedings Act of the Laws of Zambia and it stipulates that an action taken by government in a court of law is commenced by the Attorney General or if there is an action against the State, that action must be commenced against the Attorney General of the Republic of Zambia. That is in actions where government has taken action. But in this particular case government has not taken any court action at all,” Sinkamba observed.
“So when we hear these statements of take over coming out, we start wondering, which law are we using? When we hear government saying ‘we’ve taken over’, the law is very clear when government decides to take over a mining operation. The Mines and Minerals Development Act of 2015 is the only law which provides for taking over of operations in the mining sector.”
Sinkamba went on to explain the three scenarios under which a government could take over a mining operation.
“The first aspect is when environmental laws are breached to the extent that the operations become a danger to the environment and society where those mining operations are taking place, then the Director of Mine safety in exercise of section 35 of the Mines Act will issue orders to suspend the mining license or to revoke it. At that point, the person who takes over the operations of the mine is the director of mine safety. And if it’s closure for purposes of winding up, then what is triggered is section 75 of the Mines Act where now the decommissioning and closure provisions of the Mines Act are triggered. Winding up a mining company is clearly provided for in the mining laws, but what we are seeing there [at KCM] is not any semblance of what is provided for in the Mining Act and that gives us a lot of worry as to whether the statements government is making are really tying up with what the law is saying,” Sinkamba explained.
“Second aspect where government can take over is if a company which made commitments to develop certain issues within the specified period of time fails to do that or if they are hiding certain information which according to the Mines Act is supposed to be disclosed, then they can be suspended or revoked. And if that revocation takes place, again the director of mines takes over the operations for the objective of either closure or for the purposes of taking over the firm. The third aspect is where government decides to take over the operations in public interest. Again in that instance, the licensing committee of the Ministry of Mines which issues the mining licenses then may revoke the mining rights and once they’ve revoked the mining rights, again the director of mining safety takes over the operations until a new buyer or another equity partner is found to take over the operations. That is the law we know concerning takeover of those operations. But in that instance again government has to compensate the previous owner of the mining rights according to the schedules that will be provided by the director of mines who is the custodian of the assets that are on any mining right.”
Sikamba expressed concern at what government was currently doing at KCM, fearing that the actions could haunt Zambians in future.
“We are really confused. We hope that whatever is happening at KCM will not one day come to haunt this country in terms of the cost because we know that since there are two parallel actions that appear to be taking place where ZCCM is taking the route of liquidation and then government is saying it has taken over the operations in public interest, we don’t now whether they are following the right procedures to do that according to what the Act provides. Because clearly what we are seeing here is that they are not following the laws because the procedures to do that are clearly stipulated in the Act. We hope that members of the public will not have to come and endure to pay compensations to Vedanta at some point from these actions when these things are sorted out in the courts of law,” said Sinkamba.
“We hope we will not land in a situation that our colleagues in Congo did when they decided to chase First Quantum from the operations in Congo and when FQM went to litigate against that, the Congolese government initially became funny not to be able to pay but FQM obtained a global order to cease all Congolese assets abroad including the embassies and that brought the government of Congo on its knees and they are still paying the dollars which they were ordered to pay FQM. So we hope we’ll not land in that situation at some point.”
Last week, sources told News Diggers that government was negotiating with China Non Ferocious Mining Company (CNMC) for the possible takeover of KCM from Vedanta and that the Chinese firm was already conducting due diligence at the mines in Chingola and Chilabombwe.
About Mirriam Chabala
Mirriam covers current affairs and writes in-depth feature articles on social issues.
Email: mirriam [at] diggers [dot] news
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