Thursday, April 10, 2014


  • Groundbreaking report Copper Colonialism: Vedanta KCM and the copper loot of Zambia, which has shaken Zambia, is formally launched in London.

  • Protests outside the Zambian High Commission and Vedanta Headquarters in London demand that KCM annual reports are made public, and compensation paid to communities poisoned by polluted water.

  • Vedanta have told Zambian government they are making a loss and may need state rescue, while report reveals they made $362 million in 2013.

  • Vedanta may be going private as boss Agarwal becomes 70% owner and share prices fall.

Today more than 40 protesters from Foil Vedanta(1), the Afrikan diaspora(2) and other organisations in London will chanted, played drums and held banners and placards outside the Zambia High Commission in London. They demanded that some of the revelations in Foil Vedanta's groundbreaking report Copper Colonialism: Vedanta KCM and the copper loot of Zambia(3), launched in London on Wednesday 2nd April, are addressed by Vedanta and the UK government - asking them to formally investigate the company, and criticising the involvement of the Department for International Development (DfID) in promoting their Zambian operations. Meanwhile Vedanta may be about to de-list from the London Stock Exchange as Chair Anil Agarwal becomes the 70% owner by buying up shares in the suffering company.

Protesters at the Zambian High Commission today held a banner reading 'Vedanta plunders, Zambia bleeds' and placards asking the UK government to bring Anil Agarwal to trail. Loud and rhythmic drums and megaphone chants echoed in the streets during the vibrant demonstration. A delegation met the Deputy High Commissioner and handed over a copy of the report in the presence of Zambian TV and diplomats. The delegation pledged to assist the Zambian government in monitoring Vedanta and making links with its operations in other parts of the world to understand its pattern of operation.

The protesters demanded that the UK government formally investigate, and bring to trial, contentious FTSE 250 mining company Vedanta for tax evasion, transfer mis-pricing, major poisoning of water supplies leading to birth deformities, and poor workers conditions. They highlighted the role of UK taxpayers bodies - the Commonwealth Development Committee (CDC) and the DfID, in promoting Vedanta's subsidiary Konkola Copper Mines (KCM) in Zambia.(4) They also called for Vedanta and the Zambian government to release Vedanta subsidiary Konkola Copper Mines (KCM)'s annual reports, containing figures on profits and tax payment, which are currently kept secret.

The authors of the groundbreaking report visited Zambia in December, and challenged a number of major misconceptions about Vedanta in Zambia, where they had created the perception that they are an Indian company, and are making such a loss at KCM that they may need to be rescued by the state. In fact KCM are one of the highest profit making subsidiaries of the parent company making $362 million in 2013, or 12.19% of the total company revenue, according to the company's own documents and analyst reports.(5) Vedanta's tax contributions in Zambia are close to zero, and they even brag that 50% of tax paid is via employees Pay As You Earn (PAYE).

Since the report was published online in late January, Vedanta executives have visited Zambia more than four times to counteract the evidence presented in it1. However, as of yet no evidence has been presented by Vedanta to dispute the figures and other claims presented in the report.

The report details how Vedanta, a FTSE 250 London based company which is 69.71% owned by Chairman Anil Agarwal, bought KCM for a fraction of its true value, possibly losing the Zambian exchequer up to $1.4bn in total.(6) It goes on to record some of the environmental and social abuses of the company in Zambia – including major pollution of the river Kafue in 2006 and 2010 which have led to ongoing health problems as extreme as deformed births and miscarriages, as well as poor workers conditions and low pay. Demonstrators also demand that Vedanta is forced to pay the fine of $2 million served by Zambian courts in 2011 as compensation to 2000 claimants poisoned in 2006, and stop ongoing spills affecting Chingola residents.(7)

Finally, they join the calls of KCM employees and former employees in Zambia, demanding that retrenched workers are properly compensated for taking redundancy, and existing contract labourers are unionised. Following the visit of new Vedanta CEO Tom Albanese in February, newspapers reported that Vedanta has come to an agreement with the labour minister that retrenchments would be stopped and casual labourers unionised2. Protesters in London will demand that this promise is fulfilled.

Foil Vedanta's Samarendra Das says:

There is a clear pattern in the way this company operates across India and in Africa - building projects without permissions, evading tax, de-unionising and illegal mining. They have also been found guilty of gross negligence leading to mass fatalities and major pollution incidents. The UK government and the FCA must formally investigate and bring to trial this company which is bringing shame on the London Stock Exchange, and take serious action against it.”

Vedanta's share price dropped by a third during 2013, prompting Chairman and majority owner Anil Agarwal to raise his stake in the company to 69.71% to keep the company afloat, and raising questions about whether Vedanta will soon de-list and become a private company. The loss of earnings was largely due to illegalities and local protests at Vedanta's operations in India. In Goa, Vedanta's iron ore mines have been stopped for the past year following revelations that they had exported 150 million tonnes of iron ore in 2010/11 while only declaring 7.6 million, their agreed export allowance. In Odisha, their Niyamgiri mine has been banned by the Ministry of Environment and Forests due to local opposition, costing them $10 billion in lost investments, and in Australia their Mount Lyell copper mine has been suspended following a series of fatal accidents3.

Francis Wambuzi, Chair of the Former KCM Miners Association(8) and resident of Wusakile township, located beside KCM's Kitwe smelter says:

KCM workers are being over taxed and under paid, and Vedanta has shifted the majority of workers onto contractual labour who's union they do not recognise. Those who were retrenched from KCM this year as part of cutbacks have received peanuts in redundancy pay, just like the rest of the 752 retrenched workers in our group. Their factory chokes us with sulphur and we can't even grow crops. Is this development?

We demand that Anil Agarwal answers our question: who is with-holding our severance benefits?”

100 workers staged a lock in on 17th March, refusing to come out of Shaft no 1 at KCM's Chililabombwe mine because meals for overtime workers had been stopped by KCM management.

(1) Foil Vedanta are a London based international solidarity group focusing on the activities of British mining company Vedanta. We link up global communities affected by Vedanta, and hold them to account in London. We are currently aiming to make the case for Vedanta to be de-listed from the London Stock Exchange for their human rights and corporate governance abuses.

(2)Members of the Pan-Afrikan Society Community Forum, the Pan-Afrikan Reparations Coalition in Europe and the Global Justice Forum will attend the demonstration alongside other groups.

  1. The full report Copper Colonialism: British miner Vedanta KCM and the copper loot of Zambia can be found at The report, released in January 2014 has caused shock waves in Zambia and raised the debate on the way copper mining companies operate in Zambia.

  1. (see p.27 of report). In June 2012 Zambian President Michael Sata was keynote speaker at the Commonwealth Economic Forum jubilee dinner in London, hosted by CDC (which is wholly owned by DfID). The conference was part sponsored by Konkola Copper Mines and contained a session on 'Investing in Zambia' with a speech from then CEO of KCM, Jeyakumar Janakaraj alongside Zambian parliamentarians. During the meeting Sata held a closed door meeting with Anil Agarwal in the St James Crowne Plaza in London. Another speaker at the conference was Tom Albanese, the then Rio Tinto CEO, who became Vedants CEO in March, and has flown out to Zambia four times since February according to news reports.

The UK's Commonwealth Development Corporation (previously the Colonial Development Corporation and now known as CDC group) owned 7.5% of KCM when it was controlled by Anglo American, and had previously set up the Kafue Consortium to try to buy key mines during the privatisation of Zambian state mining company ZCCM. DfID also helped maximise Anglo American's profit from KCM while they themselves owned shares in it, by using $81 million of UK taxpayers money to fund the upgrading of KCM's Nkana smelter, which was subsequently abandoned by Vedanta, begging questions about this use of taxpayers money.

  1. Excerpt from report (p.12):
KCM and other mining companies in Zambia don't publish their profits, even though the Zambian taxpayer has a share in most of them via ZCCM-IH. However Vedanta's 2013 annual report claims KCM produced 216,000 tonnes of copper in 2013. In the same year costs of production were valued at 255.1 US cents/lb, putting the total cost of production that year at $1.2 billion, which would constitute a profit of $362 million (at a current copper price of $7,300).
Analysts reports from Global Data reveal that KCM made 12.19% of revenue for the entire Vedanta group in 2012 so they are certainly not doing too badly.

(6) Excerpt from report (p.6):
A 51% share in KCM was sold to Vedanta Resources for just $25 million, paid in cash, and $23 million in deferred payments, in 200412. The deal was facilitated by Clifford Chance and Standard Chartered Bank13 (one of the main bookrunners and lenders to Vedanta Resources). Within three months Vedanta had already recouperated its initial investment, making $26 million. The banks also helped Vedanta secretly negotiate a call option allowing them the right to purchase Zambia Copper Investments' 28.4% share14, which they exercised in November 2005 (a year after their initial purchase), giving them the 79.4% monopoly they currently hold on KCM, while the Zambian government - via ZCCM-IH (their mining investment wing), own the remaining 20.6%. The Competition Commission was even rendered irrelevant by the Zambian government to allow Vedanta such a large majority share15

The price negotiated for the buyout of ZCI's remaining shares is not reported, but analysts at the time valued it between $250 million and $550 million, putting Vedanta's original 51% share at between $455 and $910 million, nine to eighteen times what Vedanta paid! This means the Zambian exchequer lost between $155 and $340 million in from the sale of 21.4% of ZCCMIH's shares alone. In response, ZCI's 33% French shareholders (grouped into a company called Sicovam SA) called the deal 'the most outrageous and scandalous ever seen in Africa for decades'.

This puts the value of the entire 79.4% share held by Vedanta at between $705 and $1460 million, losing the Zambian exchequer between $600 and $1400 million in undervalued assets.

  1. In 2006 KCM spilled effluent into the Mushishima stream, and the Kafue river, raising chemical concentrations in the river Kafue to 10 x acceptable levels of copper, 770 x manganese and 100 x cobalt. Thousands were poisoned, and a litigation on behalf of 2000 Chingola residents by private lawyers resulted in a landmark $2 million fine being delivered by judges in 2011 to be paid to the claimants4. However, Vedanta challenged the ruling and the case is yet to be re-heard while the fine remains unpaid. Affected residents are now experiencing birth deformities and severe health problems, while the Mushishima stream remains regularly contaminated by the KCM mine, leaving communities without clean water and suffering ongoing health problems. (See p.21 of report)

  1. The Former KCM Miners Association is a union of workers retrenched from KCM since 2000. They are 752 in total, and 235 of them were retrenched during Anglo American's ownership of KCM (2000 – 2004). None have received the full severance pay they were entitled to, while those fired under Anglo have received nothing at all. The group have been campaigning on this issue for many years.

1Financial Times, March 10 2014, ‘Albanese back at the helm to face Vedanta challenge’. (paper version only)

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