Investors rattled by takeover of Zambian mining operation

A system of conveyor belts lead through the concentrator plant at the Nchanga copper mine, operated by Konkola Copper Mines Plc, in Chingola, Zambia, on Thursday, March 17, 2016. Konkola Copper Mines is a unit of Vedanta Resources Plc, the mining company founded by Indian billionaire Anil Agarwal. Photographer: Waldo Swiegers/Bloomberg via Getty Images

Joseph Cotterill in Lusaka

Zambia has stoked fears among businesses about the rule of law after the government oversaw the placement of a mining operation operated by India’s Vedanta into administration with plans to sell it.

Last week Vedanta launched a fightback in a South African court as it seeks an international injunction on the liquidation and possible sale of Konkola Copper Mines, one of Zambia’s biggest producers.

The case is being closely watched by international investors in the once-thriving African democracy that has fallen on hard times since President Edgar Lungu took power in 2015.

Vedanta said it lost control of the unit, which it valued at $1.6bn, in “an unfair and unjust process” in May. Zambia’s state mining investment group, KCM’s minority shareholder, placed it in winding-up proceedings without warning Vedanta.

Zambia’s government has said that the liquidation is lawful and that it is intended to replace KCM’s owner.

The saga could also expose Beijing’s extensive ties to the southern African nation, with a Chinese government-owned company said to be among bidders seeking to take over KCM. Mr Lungu has promised a quick sale after a liquidation that investors claim he ordered.

It followed an angry call by Mr Lungu for a “divorce” from private international mining companies after they complained that steep taxes imposed by his cash-strapped government had stifled production.

“They are liars, they are cheats and they take us for fools . . . those who are uncomfortable to stay in our house can go out,” the president said as he accused miners of breaking promises to invest.

Mr Lungu was channelling widespread frustration. Vedanta has been criticised in Zambia over an alleged failure to pay suppliers to KCM, a high-cost “wet” mine that must pump out the equivalent of 140 swimming pools every day to dig out the copper.


“Vedanta was a sitting duck. They were very unpopular,” said one industry observer who declined to be named given the political sensitivities of the case.


The Indian miner said that it had met investment goals for the mine, such as injecting $3bn since its acquisition in 2004. “Working capital constraints did mean the company extended payment terms” as taxes and costs increased, it added.

Yet Zambians who want Vedanta gone distrust the motives of Mr Lungu and his ruling Patriotic Front.

“It is the right thing to do but they are not the right people to do it,” said Fumba Chama, a musician who, under the name Pilato, has criticised government corruption in his lyrics.

Since Mr Lungu consolidated his power in a disputed 2016 election, he has grown increasingly authoritarian. He has clamped down on critical independent media and civil society and embraced Chinese loans to pay for infrastructure. That borrowing boom is now foundering.

Economic growth this year is expected to be at its slowest in two decades and Zambia’s debt, which has doubled to $10bn in the past decade, is edging close to default. The country exemplifies fears that a Chinese “debt trap” on the continent will lead to Beijing scooping up assets on the cheap.

Echoing these concerns, in June Zambia’s main opposition warned in a statement that KCM’s sale would be a “covert” and unlawful takeover of Zambian assets “through the backdoor”.

Mr Chama, who has himself faced censorship and state harassment, believes that Mr Lungu backed “divorce” after his party was rattled by a recent by-election loss in the party’s power base, which happens to be Zambia’s copper belt in which KCM is based. “It is a political decision, not a business or an economic one,” he said.

A spokesperson for Mr Lungu denied that the president wielded any influence over the liquidation, which Zambia’s government insisted was lawful.

At the start of this decade Zambia was regarded as a stable home for mining investment compared with neighbours Zimbabwe and the Democratic Republic of Congo.

Privatisation of mines that were nationalised in the 1970s, including KCM, led to an expansion in copper production that almost trebled Zambia’s gross domestic product between 2000 and 2017.

Vedanta, which will oppose any sale of KCM and is preparing for international arbitration over its fate, recently commissioned a study by Eunomix, the research firm. The study carried a pointed warning about the danger of reversing Zambia’s hard-won, investment-friendly reputation.

According to Eunomix, Zambia and Chile produced a tenth each of the world’s copper in 1970. By 2017, Zambia’s share had fallen to 4 per cent due to the legacy of the nationalisation while Chile controlled more than a quarter of world production.

Despite tensions with other operators such as Glencore and First Quantum, analysts said it was unlikely that there would be wider nationalisation because the government did not want to put at risk thousands of jobs ahead of Mr Lungu’s 2021 re-election bid.

The populist appeal of seizing just KCM may fade even sooner.

“What they did is not good. Not everything belongs to the government,” said Maureen Mumba, 34, a trader in the main market of Lusaka. She has expropriation problems of her own: political goons seize her goods.

While talking to Ms Mumba, stony-faced young men appeared to escort the Financial Times away from the market. They were “cadres” of Mr Lungu’s ruling party, operating as informal secret police.

Even street traders have to toe the political line.

Credit: Financial Times




  1. Kk

    Kcm under vendetta is said to be loss making and not profitable. It is on record to not pay suppliers especially the Zambian suppliers. It is known to threaten or plan mass retrenchments whenever there are government pronouncement concerning tax regime. We were almost hopeless until the government made the move to liquidate. Whether that decision is good for the country, we are yet to see. However, my disappointment is that, as citizens, we seem not to agree that the behavior of vendetta as an investor is not worthy protecting. We seem to talk politics. Surely do we need to let the looting continue unabated? At times, some observations are not worthy quoting.

    • Dude

      For me in most cases these critism I’d not done in good faith. It was very clear that KCM was a concerned and a move taken was inevitable. Yet people still oppose. I don’t know….

  2. Chendabusiku

    The article is so biased that you would be tempted to think it was written during the apartheid error. There is no mention whatsoever, of the abrogation that vendetta made to the agreements. The writer does not even make mention the fact that those thieves who come in the name of investors should be weary of thieving activities. The write who is probably paid to be so biased simply attacks the Govt of ECL.

  3. Bwalya Davies

    Comment: People of Zambia if you dont know what Vendanta was doing in KCM it’s better you keep quiet and the move by gorvernment to requidate Vendanta from KCM is the best, first to the workers in KCM and to the nation at large. Let us not politise what gorvenment has done, Vendanta has failed to run this copany: (1) Are you aware that Vendanta nearly closed the Open pit and Under ground mining in Nchanga – Chingola? (2) Instead of mining copper, Vendanta started scrapmetal dealing by striping and selling every scrapmetal in the plant. (3) Vendanta stoped buy spares and was not paying the zambian suppliers and contructors. (4) Instead of mining copper it started buying from other companies. (5) From the time Vendanta took over KCM have never employeed permanent general workers, those who are retiring and fired are not replaced. (6) If gorvenment did not interven chingola, chililabombwe, kitwe and nampundwe were going to be like luanshya during BINAN group of Indian Company.

  4. Doubt Katwishi

    Thanks for sharing @ Davies. It is clear those opposing, it is either out of ignorant or for selfish reasons. Zambians please let’s be patriotic for once. These ba mwisa have no interest in us. Just bcoz you are in opposition should not make you oppose even good intentions.

  5. Kapijimpanga

    Zambians let us stop being foolish we cannot allow an Indian enslave us in our own country some fools want political mileage on issues affecting the nation instead of supporting government on this critical issue they start opening their mouths without solutions. Government under. His. Excellency president. Edgar. Chagwa. Lungu are 100%right to divorce these crooks from kcl this time we are talking thousands of miners were going to be on the streets children not going to school and you critics of doom were you going to be happy? Love zambia not umweni akaya ukashalo chimona

  6. Afrozed

    They should know that they are not here to play and that we take these agreements seriously.. Vedantta can go to hell for all I care.

  7. Baba

    May I make an enerst appeal to the musician ,I don’t like his music, to please ,please ,please keep away from KCM issues because you don’t its Genesis and its Revelation.

  8. Kambonga !

    Zambia is still that beacon of hope. This time, those like Pilato will yell, hoot and scream and get their voices hoarse…Zambia refuses to be paraded as a willing woman raped for her beauty…the copper is ours…If it must rot, then so!

  9. Fredrick mulenga

    The plan of foreign companies is nothing but extortion of our God given resources in the name of global pilferage. They are scoundrels that have milked Africa dry. They drop dregs of food to Zambian, which they call salaries and wages and take the fat of the land! These blabbered fellows even think that they are demigods. Well, in this one Whether Lungu is right or wrong, I personally reserve my comments. I will not support myopic views that promote foreigners taking our heritage from us. Chinese, I don’t even know why we have allowed them to take over Zambias asset base! Wherever they have been, they have taken over and simply swallowed little states, Hongkong, Laos, are examples of Chinese foreign suppression. As for Indians, these are double tongues folks.
    They have their feet in Africa, Europe and America. Nibamuselela kwakaba! Over many years, I have noticed that when Zambians were buying merchandise from indians, they kept their businesses running here. When Chiluba opened our eyes and we started competing with them, Zambia was no longer home! Many trecked to USA and some to Canada. We have this Zambia and if all our leaders had the senses of Dr. Chiluba and Dr. Kaunda, and later Sata,
    we would have been some of the richest people on the planet! Why? Kaunda nationalized assets (this was right and point of good sense referenced here), Chiluba brought free market economy (another good point here), Sata and Mwanawasa brought national planning back. Sata also took back LapGreen, so what’s the big deal if Lungu gets back KCM? Kaunda called some foreign lopsided journalists ” stupid idiots!” The foreign journalist is paid by multinational companies to report that which rubbishes African leaders always! I have problems with foreigners meddling in our economy. Their agendas will not make us prosper beyond leaking their soiled boots!

  10. Mk

    I totally agree with bwalya Davies and others, I don’t know what pilato is up to.recently, he said he is going to force govt to open CBU.I really don’t know. I don’t play nafi music fyakwe

  11. Advisor

    I doubt the credibility of this story, the moment I noticed that the people who were analysing the all issue are ganja smokers like Pilato and common marketeers.

  12. Mapesho

    What level of education has pilato reached? Does anybody know?

  13. Kanyembo

    All the above comments are in support of the govt move against vendata,that is the general feeling from all well meaning Zambians.

  14. One People

    This is the only country in the world where everything has been politicized.
    Politicians will tell you that when they takeover, a bag of maize will be bought by Gov’t at ZMK200.00 per 50kg bag. Another one will come in and tell the people that at that time the price of mealie meal will be ZMK50.00 per 25kg bag. The third group will be that of blind supporters screaming- Ii boma ndiyamene tifuna.

    Sorry!! Before I start raising another issue, my comment on the issue above is that of congratulating the Government of the Republic of Zambia for doing what they did.
    Vedanta must never be allowed to come back to Zambia . It was worse than companies in Racist South Africa of the 90s and before that.

    • Bana Simon

      May I also take this opportunity to congratulate his excellency ECL for taking this bold desicion. I know it was a “bitter pill to swallow”.

  15. Former mines supplier

    Ignorance of the real facts will bring tears and gnashing of teeth.

  16. Cosmas

    I hate pilato and his girlfriend nelie. They are double hh’s lapdogs. Shame

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