ZAMBIA’S state-appointed provisional liquidator who is managing the affairs of Konkola Copper Mines (KCM) said he would proceed with the dismantling of the company and the sale of its assets.
This was after the Lusaka Court of Appeal on Tuesday declined to discharge the liquidator, Milingo Lungu, despite ruling earlier that he should arbitrate a dispute with KCM’s majority shareholder, Vedanta Resources.
ZCCM Investment Holdings (ZCCM-IH), which has a 20.6% stake in KCM, applied to put the company into provisional liquidation in 2019. Vedanta argued the step was unlawful as there were conditions in their shareholders’ agreement allowing for dispute resolution.
ZCCM-IH, which is state-owned, said Vedanta had failed to invest in KCM’s assets and had not paid dividends as previously promised.
Despite being asked to enter into arbitration proceedings with Vedanta, Lungu said this week that he would divide KCM into halves, effective January 31, and then embark on an asset disposal programme.
“Whatever the judgment means, there’s no way the provisional liquidator can start disposing of KCM’s assets, because anybody who buys those assets would therefore effectively be acquiring tainted property and they would be party to an unlawful act,” Peter Leon, Africa co-chair at law firm Herbert Smith Freehills, told Reuters.
Leon has advised Vedanta in the past, but he was not involved in the current proceedings, the newswire said.
Earlier Judge President Fulgency Chisanga said that “the order the provisional liquidator be discharged should be removed from the settled order” (of arbitration). In Zambia, court rulings are implemented through an “order” which all parties must approve, said Reuters. If they disagree, the presiding judge settles the order.
In November 2019, Vedanta won an injunction from the Lusaka High Court preventing Moxico from buying KCM’s Mimbula, an open cast resource near Chingola. Moxico, which is listed in the UK and run by former Rio Tinto executive, Alan Davies, had offered $20m for the asset in a transaction approved by the provisional liquidator.
The attempted sale of Mimbula to Moxico supported suspicions at the time that the Zambian government was merely expropriating KCM, which produces about 100,000 tons a year of copper concentrate, ahead of selling it to a third party.
The dispute over KCM extends to the highest levels of the Zambian political order. In 2019, President Edgar Lungu, in referring to Vedanta, said the country would willingly sanction companies that failed to comply with the country’s laws. Since then, Vedanta has been in the crosshairs of the country’s mines minister, Richard Musukwa.
Musukwa said at the Mining Indaba conference last year that Zambia was “a victim” of criminal activity. “We deserve African and international support to make sure Vedanta pays the price,” he said. “Vedanta Resources pledged $398m in a project and did not bring that. It pledged another $500m – it did not bring that. It pledged another $250m – they did not bring that money,” he said.