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Groundbreaking report Copper Colonialism: Vedanta KCM and the copper loot of Zambia, which has shaken Zambia, is formally launched in London.
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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.
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Vedanta have told Zambian government they are making a loss and may need state rescue, while report reveals they made $362 million in 2013.
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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.
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.
Source : www.foilvedanta.org
(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.
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The full report
Copper Colonialism: British miner Vedanta KCM and the copper loot of Zambia can be found
at www.foilvedanta.org.
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.
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(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.
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Excerpt from report (p.12):
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
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.
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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)
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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)
2http://www.lusakatimes.com/
4 http://www.
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