Vedanta boss Agarwal commits to Zambia despite shocks, rows

Anil Agarwal, Vedanta executive chairman

VEDANTA chairman, Anil Agarwal, was at his contrarion best today telling an investment forum in Zambia during a two-day visit that the southern African country was a preferred destination for his company which would to pump $700m into new copper production – enough to take the firm’s total investment to $1bn.

Agarwal, who also acquired voting rights over 21% of Anglo American (2% directly in his personal capacity, and the balance in two mandatory exchangeable bonds), said Vedanta would build a new cobalt refinery and a coal-fired power plant at its Konkola copper and cobalt assets. The investment is through its Konkola Copper Mines (KCM) in which Zambian state-owned ZCCM-IH holds a 20.6% shareholding.

The business environment in Zambia is volatile with conflagrations and disputes kicking off almost at random with its keystone investors.

Last month, for instance, Zambia claimed that one of its other major and long-standing investors, First Quantum Minerals, owed its tax authority $7.9bn related to underpaid import duties it for machinery and other items which it alleged had not been paid. In a separate event, the country rationed electricity supplies to miners, including Glencore, as part of a dispute related to an increase in tariffs.

Unmoved by these conditions, Agarwal said KCM planned to increase production to 400,000  tonnes a year “… in the next few years”. The growth will be driven by an injection of $700m, following Vedanta’s previous injection of $300m as part of a pledge to invest made by Agarwal in 2007, according to a company press statement.

“Our desire is to have a win-win situation,” said Agarwal on government and business relations. “The government must be happy the Zambian public must be happy and our communities must flourish,” he said.

“I was eager to come to Zambia almost 15 years ago at a time when KCM was facing a lot of challenges. We have now created a strong position for KCM after investing over $3bn. Last year I pledged to invest an extra $1bn,” he said. “We are targeting strong growth for KCM in the years ahead.”

Almost no public appearance by Agarwal is complete without a reference to his controversial investment in Anglo American. His rationale for the investment is an interest in South Africa. The shares in Anglo were bought in two tranches: the first – a swoop on £2bn worth of shares – was as early as March 2017 at a time when the former president Jacob Zuma administration’s state capture efforts were at their zenith.

In December, ANC deputy president Cyril Ramaphosa, was elected president of the ANC – a development that was swiftly followed by his appointment as the country’s president.

“Anglo is very much a part of South Africa and they should be proud to remain in South Africa,” said Agarwal. “I am happy that they have changed their mind about selling all their assets in South Africa. All this, I am sure, is because investor confidence has picked up in the wake of President Cyril Ramaphosa’s election,” he said.