MINES and Minerals Development Minister Richard Musukwa says at the moment, the proposed date for the arbitration process between ZCCM-IH and Vedanta to begin is in November 2021.
But Musukwa says ZCCM-IH has intentions to appeal the court’s decision.
Rendering a ministerial statement to Parliament, Thursday, Musukwa said the parties were looking to find an earlier time to commence arbitration proceedings.
“In terms of the arbitration proceedings, the proposed date for the hearing is November 2021 but the parties are looking at the matter with a view to finding an earlier time to hold arbitration proceedings,” Musukwa said.
“I wish to give comfort to the House and the nation at large that the mining potential under KCM is still very viable and that there is no undue economic distress resulting from the ongoing process. Government will do everything possible to ensure that a credible investor continues operating the mines after the arbitration process. Government, through the provisional liquidator, is taking necessary measures to ensure operations at the mines are sustained. This includes running the smelter, tailings leach plant, I also wish to inform the House that the government through the liquidation process, has prioritized and protected the welfare of employees through payments of their dues. Those that are due for retirement will also be paid as agreed in their terms and conditions of employment. The trade unions have also been engaged to ensure that their members are informed of the process.”
Musukwa, however, said ZCCM-IH had intentions to appeal the decision of the Court of Appeal.
“In terms of the court proceedings in South Africa, the appeal is yet to be heard by the Supreme Court. I wish to inform the House that the judgement of the Court of Appeal against ZCCM-IH PLC is to the effect that winding up proceedings have been stayed and referred to arbitration in line with the shareholder agreements (SHA ). The Court of Appeal further ruled that Vedanta has locus standi to apply for a stay of the winding up petition and refer the matter to arbitration. The judgment further said the arbitration agreement between ZCCM-IH PLC and Vedanta is operative, hence the need for the arbitration hearings and determination to proceed. The status quo before the stay will continue to operate until resolution at arbitration. The government upholds the rule of law and will respect the court processes. In line with the law, ZCCM-IH PLC has intentions to appeal the decision of the Court of Appeal,” he said.
Musukwa insisted that it was necessary to place KCM under liquidation, an action done to pave way for implementation of interventions to save the assets from being run down by Vedanta resources.
“Prior to its liquidation, the performance of KCM had declined drastically over the years as seen from the reduction in mineral production from 47,452 tonnes by mid-year 2018 to 31,310 tonnes by mid-year 2019. This increased the indebtedness of KCM leading to its failure to meet obligations as they fell due. The annual production of copper at the time of vesting the operations in Vedanta in 2004 was 191,685 tonnes. As at 2018 when the operations were in the control of Vedanta, the production had dropped to 96,298 tonnes,” Musukwa said.
“The purpose of the privatisation at the time was to bring an investor to grow production, bring in fresh capital and sustain and even increase the number of jobs. The reality is that all these factors were neglected by Vedanta. Given the background, it was necessary to place KCM under liquidation, an action done to pave way for implementation of interventions to save the assets from being run down by Vedanta resources, the majority shareholder in the company. Further, it is still government wish to find a new equity investor with technical and financial capacity to re-capitalize the mine and operate it efficiently.”
He said Milingo Lungu’s powers as provisional liquidator remained in place.
“Government policy on mining remains that of encouraging the development of a private sector-led benefits for the country and the investor. The position with regard to liquidation of KCM in that the stay of the liquidation proceedings has not affected the status of the provisional liquidator. The liquidator’s powers conferred by the High Court on 21st May, 2019 remain in force and the liquidator has continued to run KCM . The stay of proceedings in the High Court means that no further procedural steps can be taken in the High Court until the dispute between ZCCM and Vedanta is heard by an arbitrator. Further, companies that are interested in taking over of KCM still await the court process to be completed,” he said.
“Government stance with regard to KCM should not be considered as nationalisation but an action necessitated by failure on the part of the investor to comply with conditions of grant of licence. Further, inquiries by prospective investors on KCM have continued. I wish to update this House, all KCM employees, business partners, providers of goods and services, the nation and all KCM stakeholders that the Court of Appeal has not discharged the provisional liquidator and he remains with full powers as granted by the High Court of Zambia on 21st May, 2019. Further, that operations of KCM remain on course with production ramp-up being the key focus as the company continues to engage with its business partners in a normal way.”
He said Milingo continued to exercise the executive responsibility of running the company and the KCM executive management committee remained accountable to him.
“As provided for under corporate insolvency act and powers granted to the provisional liquidator the provisional liquidator continues to exercise the executive responsibility of running the company and the KCM executive management committee remains accountable to the provisional liquidator. I wish to urge all employees to continue working normally, safely and remain steadfast in the pursuit to make KCM a great organization. Our stakeholders should also remain calm as we continue to work towards a common goal of ensuring safety and increased production,” he said.
Meanwhile, when Liuwa UPND member of parliament Situmbeko Musokotwane asked why government rushed to put the company under liquidation when all the indications were that this was a matter that had to go to arbitration, Musukwa said government did not rush.
“Government did not rush. If you followed the happenings at KCM, you will realize that KCM was in the public media for many years for wrong reasons among them indebtedness and failure to increase production,” he said.
And when Monze UPND member of parliament Jack Mwiimbu asked what was the stay of execution of the matter before the court and its effect on KCM, Musukwa said the process and the judgment by the Court of Appeal did not impede, in any way, the authority and the powers for the liquidator to continue running and operating the mines
“There are two processes, there is the liquidation and also the process that leads to the entire liquidation process. I sit on an exposure of eminent lawyers who have guided that this process and the judgment by the Court of Appeal does not impede in any way the authority and the powers for the liquidator to continue running and operating the mines as it were. To that effect, I have earlier indicated that in terms of the process the ZCCM-IH has indicated that they are appealing because they are not happy with the judgment,” said Musukwa.
“The effect of the stay is that we are now waiting for the arbitration which has been structured to take place between now and November 2021. And this is the process we have objected to because we feel very strongly that the time lapse is too much In terms of resolution of this matter, what is at stake is that we are on status quo in terms of the powers of the liquidator.”