[Editor’s note: An earlier version of this article attributed the incorrect author to a BusinessDay article “SA must pay attention to damage Zambia has done to its mining industry.” However, the correct title of the article was “Resource nationalism doesn’t have to be a dirty word — just ask Norway,” published on 27 June 2019. The article text has been updated to reflect the correct attribution. We regret any inconvenience caused by this error.]
The South African High Court has today, Tuesday, granted Vedanta Resources an urgent interdict halting the liquidation of Konkola Copper Mines (KCM) which it owned via 79 per cent shareholding until a final determination through arbitration.
Vedanta Resources, which had previously been sponsoring stories about how unprofitable it was to run KCM, has surprisingly now launched a legal battle for a mine that made it suffer ‘losses’.
Through this push to have KCM back, Vedanta has contracted international organizations such as Eunomix, a South African institution, to be the mine’s economic research attack dog in the issue of the KCM liquidation.
And with the South African court’s ruling, Vedanta feels it has won the legal battle over KCM when behind the scenes, the investor is clearly not interested in having the assets of the mine as it has already made the profits it needed out of it. This was confirmed by the boastful comments made by its chairman, Anil Argawal, who bragged that $500 million was being made out of the country’s biggest mine every year.
This was the starting point of the anger the Zambian government felt towards the investors of KCM, who later neglected the mine and forgot about the agreement made to keep it afloat. The government has justly made efforts to claim the ownership of the mine following this breach.
But KCM has employed Eunomix and others to paint a bad picture over the liquidation process. Vedanta has further sponsored an economic impact study on liquidation of Vedanta’s assets in KCM, which will be carried out by Eunomix.
A recent Op-Ed titled “RESOURCE NATIONALISM DOESN’T HAVE TO BE A DIRTY WORD – JUST ASK NORWAY” was published by South Africa’s BusinessDay newspaper written by Tokollo Matsabu, the Research and Engagement Specialist at Eunomix. In this article, Matsabu sharply criticised the current process by the Zambian government to find another investor in Konkola Copper Mine, arguing that “the approach to the dispute with miner Vedanta looks like the wrong resource nationalism. Government’s heavy-handedness is doing damage to the country’s reputation and will certainly accelerate economic crisis.”
What Matsuba fails to disclose in the BusinessDay is that Vedanta Resources is a client of Eunomix and is openly acknowledged as having paid for the commissioning of this recent study, representing a deeply concerning hidden conflict of interest.
This article, as well as another anonymous editorial published by BusinessDay, share a common perspective – they appear to believe that governments must avoid taking over assets of mines owned by foreign investors should there be a disagreement. Any country that values its mineral resources would have done exactly what the Zambian government has done to protect its mineral wealth from investors that care less. The story of Vedanta’s attitude towards KCM operations is in public domain as several stakeholders – mine unions, workers and communities – backed the government’s decision to terminate the agreement that existed with the investor.
But Vedanta quickly sought the urgent order in South Africa to prevent KCM from being wound up, claiming that the dispute should be subject to arbitration, which cannot happen as the government is currently looking for a new investor. This is clearly a ploy to delay the process to find an alternative investor in KCM because whether or not it gets back the KCM assets is not priority on the list of what Vedanta wants to do in Zambia.
Additionally, Vedanta recently used South African lawyer Peter Leon to write an article in the Financial Times on the ongoing liquidation of KCM, but Leon failed to disclose that his law firm, Herbert Smith Freehills, is being paid by Vedanta. This is highly unethical.