Vedanta Zinc says Gamsberg expansion too risky without water, power guarantees

Deshnee Naidoo, CEO, Vedanta Zinc International

VEDANTA Resources has urged the South African government to provide it with certainty on issues ranging from infrastructure development to fiscal stability or the second phase expansion of its Gamsberg zinc mine in the Northern Cape province might prove too risky to undertake.

“We need speedy decisions on issues like power, infrastructure and fiscal stability,” said Deshnee Naidoo, CEO of Vedanta Zinc International (VZI), a subsidiary of Vedanta Resources. “Without certainty on these issues, investors will be reluctant to commit to projects that might take a long time to show a return on investment.

The risk is simply too great”.

Naidoo’s comments echo those of Anglo American CEO, Mark Cutifani, who was quoted by Bloomberg News on November 6 as saying that the indebtedness and operational problems of Eskom, the power utility, was the single largest risk factor potentially influencing its planned R100bn investment in South Africa.

Cutifani’s comments were made at an investment conference, the second of its type, convened by South African president, Cyril Ramaphosa, who has a target of $100bn in new investment for South African in ten years.

Vedanta chairman, Anil Agarwal, earlier voiced his support for the investment targets. Vedanta has committed R21.4bn in investment to Gamsberg phases one and two and the smelter at the first investment conference. The first phase of Gamsberg has been commissioned with full production planned for 2020.

Naidoo said VZI was interested in reaching an agreement with the government on hybrid power supply model for the Gamsberg smelter as well as “… working together to ensure a market for the co-products of the zinc smelting process”.

VZI was also seeking clarity on the availability of water in the Northern Cape and the creation of a market for the sulphuric acid which is the main by-product of the zinc refining process. “Without these, the boost to the province’s economy represented by the potential Vedanta investment is unlikely to materialise,” the company said in a statement.

1 COMMENT

  1. We have a smallish Gold mine in SA and with Eskom power so uncertain in supply and quality and so much incompetence in DWAF it is unlikely we would invest again in this country. CR has some tough tasks to perform ahead – walking on water is one of them!

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