The tribunal appointed in the arbitration proceedings in the matter of Vedanta versus ZCCH-IH which were commenced by the former, has rejected the application for the withdrawal of the matter as well as the removal of the liquidator, according to a statement from ZCCM-IH.
“Shareholders of ZCCM Investments Holdings Plc (“ZCCM-IH”) are referred to the announcements dated 23 May 2019, concerning the filing by ZCCM-IH of a petition in the High Court of Zambia for the winding up of Konkola Copper Mines PLC (“KCM”) on 21 May 2019 (the “Petition”), the appointment by the Court of Mr. Milingo Lungu as provisional liquidator of KCM (the “Provisional Liquidator”) and the legal proceedings commenced in the High Court of South Africa and applications made to the Zambian High Court by Vedanta Resources Limited and Vedanta Resources Holdings Limited (together “Vedanta”)”, read a statement authorized by order of the Board issued by Company Secretary Chabby Chabala on 1st April 2020. “In compliance with the requirements of the Securities Act No. 41 of 2016, shareholders are informed that on 23 March 2020, the tribunal appointed in arbitration proceedings commenced by Vedanta against ZCCM-IH dismissed an application by Vedanta for an interim measure requiring ZCCM-IH to withdraw the Petition and procure the removal of the Provisional Liquidator from office”.
ZCCM-IH has indicated it will provide details of these proceedings in due course. KCM is currently under provisional liquidation, a process that was initiated by ZCCM-IH, a minority shareholder, which presented a petition for compulsory liquidation in the High Court on 21st May, 2019.
A comprehensive Ministerial statement on the petition was provided by Minister of Mines and Minerals Development, Richard Musukwa to Zambia’s parliament following the appointment of the liquidator.
“The petition included an application for the appointment of a provisional liquidator”, read the Minister’s statement. “The appointment of a provisional liquidator was necessitated by the need to protect assets in the interim period between the presentation of the petition and the determination of the matter”.
Prior to the petition application, the Minister stated that there was a technical audit that was conducted on the mine by a multifaceted team of professionals. “The audit was conducted by a technical audit committee appointed by the Government comprising experts in mineral resources management, mineral processing, governance, labour issues, mining engineers and business administrators including lawyers from various institutions such as the Government, academia, the legal profession, industry and various universities in our country”.
The technical team revealed the following areas of concern regarding the financial and operational health of Zambia’s wettest mine:
- High Indebtedness and Threat of Insolvency
- Non-Compliance to the Commitment to Bring In Foreign Direct Investment (FDI)
- Lack of Investment to Develop New Ore Sources
- Failure to Adopt Cost-Effective Means of Production
- Lack of a Strategic Plan to Improve Operations at KCM
As the matter continues to play out, the Mines Minister’s message remains consistent. In February 2020, at the annual Cape Town Mining Indaba, he reiterated some of the challenges the country had faced with investor. “Zambia is a victim and it needs support. Vedanta Resources pledged to put in $300 million (R4.44 billion) they further pledged $500m and another $250m they did not bring that money”, read an extract from his response regarding the KCM debacle.
Source: Financial Insight Zambia