Vedanta Commits to Clear $250 Million Debt on Reacquiring Zambia’s Copper Mines
Vedanta Resources Ltd. has committed to paying off the outstanding debt of $250 million to its suppliers in Zambia, as soon as it regains control over the copper mines that were confiscated by the Zambian government over four years ago.
In 2019, during the tenure of former President Edgar Lungu, the Konkola Copper Mines were placed under provisional liquidation due to allegations against Anil Agarwal’s Vedanta.
The accusations included misrepresentation of expansion plans and insufficient tax payments. This move initiated a sequence of legal battles, culminating in the current President Hakainde Hichilema’s efforts to amicably resolve the dispute.
Anil Agarwal, aiming to alleviate the considerable debt burden of the parent company, has also made a commitment to infuse $1 billion into Konkola and to significantly increase copper production from the operation.
Notably, Zambia’s copper output for the year 2023 is projected to reach its lowest level in 14 years. The industry is in dire need of new investments to capitalize on the rising demand for copper, which fuels the global shift towards clean energy.
Agarwal emphasized that the intention behind settling all outstanding dues is “to win the favor of the people.” He stated during an interview at Bloomberg’s Johannesburg office that financial constraints will not hinder this initiative.
Vedanta is facing a substantial debt repayment challenge, with approximately $2 billion in bonds maturing in 2024, including a hefty $1.1 billion installment due in January.
Following this development, Vedanta’s shares saw a 1.3% increase in Mumbai, marking the most significant upswing in a two-week period.
For Zambia, the increased productivity of the mines would play a pivotal role in boosting tax revenues, as the nation heavily depends on copper for about 70% of its export earnings.
The mining facilities under Konkola consist of shafts, a smelter, and a refinery. Presently, the mines yield around 50,000 metric tons of refined copper.
In comparison, First Quantum Minerals Ltd.’s copper mines in the country produced a total of 390,000 tons in the preceding year.
Vedanta, acknowledged as India’s largest mining corporation, is engaged in the extraction of diverse metals ranging from aluminum to zinc. The company has also expanded its operations across Africa, with active mines in Namibia and South Africa.
Agarwal expressed his strong affinity for Africa, stating, “Africa is my heart. If I have to marry two wives, one will be India, one will be Africa.”
