Vedanta, a diversified natural resources conglomerate, is facing the liquidation of its mining business in Zambia as the local government has continued with the liquidation process. Vedanta is locked in a dispute with Zambian government, which has accused the Mumbai-headquartered company of defaulting on tax payments and violating the operational license. Vedanta has a controlling stake in Konkola Copper Mines (KCM) in which 20 percent is owned by Zambia's state mining company ZCCM-IH.
It is to be noted that Vedanta had taken the matter to arbitration and made efforts to halt the liquidation process in May. But the Zambian high court appointed a provisional liquidator to dissolve the company. However, contrary to Zambian high court's order, the seat of international arbitration in Africa stationed at Johannesburg ordered the halt of any sell-off KCM efforts. But the Zambian government has gone ahead with the process and said last month that it expected numerous bids for KCM within weeks.
Vedanta-controlled Konkola Copper Mines (KCM) is a major integrated copper producer in Zambia and operates one of the only two mines producing electro-refined copper cathode in the entire region. Its products are mainly exported to countries in South East Asia, China and the Middle East. The Zambian government is also focussing on Vedanta to extract as much tax revenue as possible as Zambia is Africa's second-biggest copper-producing country after the Democratic Republic of Congo. The country is reeling under high domestic as well as foreign debt.
However, Vedanta has denied any wrongdoings. In a statement issued to an online portal Business Today, the company clarified: "Vedanta is clear that KCM has not violated its license conditions. It also received no warning of these alleged breaches before the minority shareholder brought ex parte liquidation proceedings against it. As regards to the allegations of unpaid taxes, Vedanta contends that the Zambia Revenue Authority owed KCM (as of May 2019) over $180 million in unpaid VAT Refunds."
The company officials were expecting to meet Zambian President Edgar Lungu on his visit to India this week to discuss the issue but the Zambian State House has stated that no such meeting is scheduled. "The president is expected to meet representatives from 12 Zambian-based Indian companies, and KCM, whose majority shareholder is Vedanta, is not one of them. His Excellency the President has already stated that the Zambian government will follow the Zambian people's wish over the KCM issue," the State House statement read.
