Vedanta warns off KCM asset pickers as Zambia’s provisional liquidator proceeds with split

VEDANTA Resources has warned potential buyers of assets held in its 85%-owned Konkola Copper Mines (KCM) that any corporate activity would be “deemed inappropriate”, and that it would seek to protect its interests in Zambia and internationally.

The Indian firm’s comments come as the provisional liquidator, appointed by the Zambian government, progresses a plan to split the assets – consisting of mining and processing facilities – ahead of selling them to third parties.

The Zambian government has, through its ZCCM-Investments Holdings (ZCCM-IH) company, forbidden Vedanta access to KCM’s assets arguing that the group failed to meet investment promises. Vedanta has contested the matter in the Zambian and South African courts. ZCCM-IH has a 15% stake in KCM.

A recent Zambian High Court ruling found that the provisional liquidator should honour KCM’s shareholders’ agreement allowing for disputes to be settled out of court. However, the Zambian court did not remove the provisional liquidator.

Said Vedanta Resources group CEO, Sunil Duggal, in a statement today: “KCM remains an important asset to Vedanta and Zambia and its impending split is both highly concerning and not in line with due legal process”.

“The investment community must remain conscious that any investment in a potentially split asset will be deemed inappropriate,” he added.

Vedanta argues that KCM’s mining and processing facilities were best operated as an integrated structure. It said it was its belief that “… that a split of the assets will inevitably result in a substantial loss of revenue for the Zambian state and its people, as well as the long-term erosion of the individual assets’ value”.

Vedanta has promised to invest $1.5bn in KCM’s assets.

The action comes as the copper price scales fresh heights approaching $8,500/t, its highest level for more than eight years, and amid optimism its price could eventually move higher.

Investment bankers, Goldman Sachs and Citi, recently doubled down on their bull calls for the copper market, raising their 12-month price target to $10,000 per ton. Goldman Sachs warned that copper may be heading for a period of “scarcity pricing” as it was an integral metal in global decarbonisation.