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Vedanta is set to take back ownership of a key copper mine in Zambia, which seeks to revive mining investment four years after Africa’s second-biggest producer kicked out an Indian group.
Anil Agarwal’s group will invest $1 billion over five years to revive the Konkola Copper Mines, Vedanta and President Hitchlema’s government said on Tuesday. , as a condition for restoring operational control over the southern African nation’s historic copperbelt heartland.
Vedanta lost control of KCM in 2019 after Hichilema’s predecessor Edgar Lungu’s government accused the group of lack of investment and used a 20% stake in the mine to put it into provisional liquidation. Vedanta has denied the claims and has launched a legal battle to secure the mine’s return.
KCM struggled to continue operating under state control, and after Lungu stepped down in 2021, the Hichilema government began negotiations over ownership. Under the deal, Vedanta will also pay $250 million to the mine’s local creditors to restore its majority stake.
“Vedanta will resume control and resume operations of KCM as majority shareholder,” Zambia’s Mines Minister Paul Kabuswe said.
“Vedanta will become a fully integrated copper producer, meeting India’s rapidly growing demand while making Zambia the world’s leading copper producer,” Agarwal said.
Hichilema has set an extremely ambitious goal for Zambia to more than triple copper production over the next decade, from less than 800,000 tonnes last year to more than 3 million tonnes a year.
Zambia needs a copper mine revival to help pay down billions of dollars in hard currency debt that is being restructured years after defaulting in 2020. Zambia suspended loan payments, including a $3 billion bond, after borrowing surged under Lungu. He was defeated by Sichilema in the country’s 2021 elections.
But the Zambian government has warned that output is expected to fall to about 680,000 tonnes this year, the lowest level in more than a decade, underscoring the difficulty of turning around the mine even as Hichilema is welcoming new copper exploration.
Most of Zambia’s modern copper production now comes from outside the copperbelt, through large open-pit mines in the neighboring north-west province, which is or is considering investments to expand operations.
Mines on the Copperbelt are expensive to operate because they often extend deep underground and have high demands on water and electricity. However, the mines still attract interest because they contain relatively high-quality copper deposits that are facing a shortage as the global transition to clean energy and electrification accelerates.
The Zambian government is also looking to sell the Mopani copper mine, a copper belt miner the Lungu government bought from Glencore for $1.5 billion in 2021, and has since run into production problems.
Vedanta also agreed to increase the wages of KCM miners by one-fifth and pay them a one-time payment of K2,500 ($122) each.
In July, KCM workers told the Financial Times that they were on low-paid, short-term contracts, hampering productivity and making it difficult to realize Hichilema’s ambitions.
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