Mines and Minerals Development Minister Richard Musukwa says government cannot proceed with engaging a new investor to take over operations at Konkola Copper Mine (KCM) Plc due to the ongoing court processes.
But Alliance for Democracy and Development (ADD) president Charles Milupi says government has no clue of how to handle the KCM saga, as evidenced by the constant flip-flopping on the matter.
On June 20, while on a State visit to Mozambique, President Edgar Lungu announced that a new investor would be announced by the end of last month to take over operations at KCM from Vedanta Resources.
Musukwa went further to tell journalists at a press briefing that government would not wait for the court process to conclude before assessing the bids from prospecting investors.
But last month, a South Gauteng High Court in Johannesburg granted Vedanta an interim injunction against ZCCM-IH and liquidator Milingo Lungu, directing ZCCM-IH to withdraw the winding-up process of KCM from the Lusaka High Court and resolve all shareholder disputes through formal arbitration in South Africa, in accordance with a Shareholders Agreement.
Without admitting that government plans have been thrown off tangent by the aggressive legal approach taken by Vedanta, Musukwa said government could not go ahead with announcing a new investor at the end of July, as promised by President Lungu, saying the matter was still active before court.
When reminded that the President had promised KCM employees that a new investor would be unveiled by July, the minister said all other activities and discussions on the state of affairs around KCM had been halted.
“I think you know that, that issue is before the court and I am sure that if you ask your bosses at News Diggers, I am sure that they will tell you that there is a [Public Discussion Forum] programme we must have done in Chingola, which is on hold and it’s because of that same court process, isn’t it? So, please, can we wait for that?” Musukwa said.
Asked what could have stalled the assessment of bids in July, as he had assured journalists, Musukwa responded: “I… I can’t discuss this matter.”
Asked if it was true that the arbitration process initiated by Vedanta in South Africa had somehow pushed back interested investors, Musukwa again responded: “I can’t discuss this matter, we will get in touch…”
Commenting on the matter, Milupi said the minister’s response shows that the PF government had no idea how to deal with the problem it created in the KCM saga.
“This clearly shows that on the matter of KCM, they do not seem to know what they are doing. They took a decision without full consultations with their own lawyers and I doubt very much if the Attorney General (Likando Kalaluka) was consulted fully. Resulting from all these contradictory statements that they can’t comment because the matter is in court, which court are they talking about? If they are talking about the court here in Zambia, I think there was a ruling yesterday (Thursday) that said they can go ahead. But if they are talking about the court in South Africa, the court of arbitration, they said they were going to ignore that. What has changed? So, because they are not sure of what they should be doing, that is why they are now coming up with contradictory statements,” Milupi observed in an interview.
“Right from the outset, we warned that extra care needed to be taken to deal with the KCM issue because; one, it was a major player in the economy of Zambia; secondly, it had a number of Zambian employees, up to 13,000; number three, there are a number of local businesses who are suppliers and contractors to the mining sector; and then the last reason is that, there are a number of communities in Chililabombwe, Chingola, who directly depend on the employees who work for KCM that when they get paid, they can go to the market and buy tomatoes and whatever. We did say that we were sympathetic to the issues concerning KCM in terms of their lack of proper operations. But the way to have dealt with them, they should have taken into account all the legal consequences that might arise if they take whatever action. They decided to go the liquidation route. But the liquidation route says ‘wind up the company and sell the assets and pay the creditors, according to their ranking.”
Milupi said that he and other stakeholders would have preferred government took a different mode of addressing KCM challenges.
“We would have preferred that the minority shareholder, who had the golden share, exercise their due diligence when they were on the board to make sure that no decision was taken that was not in the interest of the Zambian people through the Zambian government. That didn’t happen. Now, we are jumping from one place to another without really knowing what is happening! In the meantime, can they tell us whether the operations are going on? Can they tell us whether people are getting paid and for how long they are going to be paid? If they are now saying they can’t take action because the matter is in court, how long is it going to take? But I agree with them, I mean no sensible investor would come in and take over an operation that is still being disputed by the previous owners. So, lots of care needed to be taken, but I doubt very much if they have taken this care,” said Milupi.
“And this leaves us in a very precarious situation. We don’t seem to learn lessons, the LapGreenN issues should have given us lessons on how government can deal with these entities that have previously been privatised. Also, what’s the impact on potential investors, both local and foreign? All these matters ought to have been considered by a government that understands what they are doing. In this particular case, the actions quite clearly demonstrate that they do not understand what they were doing.”