Mining baron Anil Agarwal has said that Zambia must withdraw an import duty on copper and give his company due VAT refunds to help restore investor confidence that was shattered by the African nation's move to liquidate his copper-mining business.
Vedanta Resources has taken the government of Zambia to international arbitration following the seizure of its Konkola Copper Mines (KCM), one of Africa's biggest copper producer, stunning investors.
"We took the plan 15-16 years back. They (recently) slapped duty on copper concentrates, withheld our VAT refunds of USD 200 million... (Zambian) government has been pressuring us to continue operations but we said please resolve these issues first," Agarwal told PTI here.
Last month, Zambian government seized control of KCM, one of Africa's biggest copper producers saying it had breached environmental and financial regulations.
State-controlled Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) is seeking liquidation of KCM, in which it owns 20.6 per cent. Vedanta owns 80 per cent of the company and has has invested over USD 3 billion in KCM in adding processing capacity and extending the mine life since it acquiring the business in 2004.
Agarwal said the African nation must "give us refunds due to us and remove (5 percent import) duty on concentrate".
Zambia, which is Africa's second-largest copper producer, is not in a good shape financially, he said.
KCM is Zambia's largest integrated copper producer with nearly 13,000 workers. It invested USD 500 million in a new copper smelter which produced 135,000 tonnes of refined copper in the first nine months of 2018.
"I have a feeling they will resolve the issue... I am hopeful of an amicable solution," he said.
The Zambian High Court has appointed Zambian law firm Lungu Simwanza & Company to act as provincial liquidator for KCM following an application by ZCCM-IH.
"The court is hearing the case, let's see (what comes out of it)," he said.
Zambia's government has accused KCM of lying about expansion plans and paying too little tax.
Companies including China Nonferrous Metals Co. and Eurasian Resources Group have reportedly expressed an interest in buying KCM.
Agarwal reiterated that the company is eager to resolve the dispute through negotiations with the government.
In had in a "personal message" published in a Zambian government newspaper on May 29 warned that the African nation was scaring investors and that mining companies are likely to stop operating in the country.
"The current position can only hurt the country's hard-earned democracy and investor-friendly status," Agarwal had said in the advertisement. "I see a lot of mining companies looking to exit Zambia, despite there being huge potential to develop downstream industries."
Fixed-income investors have already fled the country's bonds. The Zambian Kwacha has fallen six percent against the US dollar this year alone, making it one of the world's worst-performing currencies.
Rating agency Moody's has downgraded the country's creditworthiness to junk status.
Vedanta's dealings with the southern African nation have been strained since at least 2013 when the government canceled its then chief executive's work permit after KCM announced plans to fire 2,000 workers. The company has hardly posted profits since 2004.
Source: moneycontrol.com