Vedanta Seeks Capital to Revitalize Konkola Copper Mines in Zambia
Vedanta Resources Ltd, led by billionaire Anil Agarwal, is in discussions with trading houses to raise capital for the revival of the Konkola copper mining and smelting complex in Zambia.
According to sources familiar with the matter, Vedanta has explored tolling and prepayment arrangements with commodity traders, including Mercuria Energy Group, for the output from Konkola Copper Mines Plc.
In addition to discussing tolling and prepayment facilities, Vedanta is considering the sale of a minority stake in KCM to address creditor obligations and invest in the mines, which were placed under provisional liquidation in 2019. The talks remain confidential, as disclosed by the sources.
Vedanta recently reached a resolution with Zambia over the copper assets, agreeing to pay $250 million to settle some of KCM’s outstanding obligations to suppliers.
Moreover, the company committed an additional $1 billion over five years for an underground expansion project. However, the operation’s return to Vedanta hinges on creditors’ approval of the debt-repayment deal next month.
These discussions underscore the challenges Vedanta faces in reclaiming and retaining one of its key assets. Zambia has imposed financial deadlines as a prerequisite for ending the protracted legal disputes over KCM’s ownership.
Vedanta aims to raise approximately $1.4 billion, primarily to cover impending payments to KCM’s creditors. Following this, the company intends to seek a buyer for a minority stake in KCM to secure the remaining funds.
Responding to Bloomberg’s inquiries, a spokesperson for Vedanta stated, “We are engaging with prospective partners for both short-term financing and longer-term equity financing but cannot disclose the names of these partners/investors due to the sensitive stage these discussions have reached.”
Prepayment facilities, where trading houses advance cash to miners amortized through commodity deliveries, have become prevalent in an industry where traditional bank financing is increasingly scarce, especially as copper prices surpass $10,000 per ton.
KCM was placed under provisional liquidation after allegations from the previous Zambian government accused Vedanta of misrepresenting expansion plans and tax payments. Vedanta refuted these claims.
Konkola Deep, KCM’s flagship operation, extends nearly a mile underground and is renowned as one of the world’s wettest mines.
Despite possessing a smelter capable of producing over 300,000 tons of copper annually, KCM’s output in recent years has fallen short, producing less than 40,000 tons in 2023. The smelter processes ore from Konkola as well as third-party concentrates.
