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.
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).
The full report
Copper Colonialism: British miner Vedanta KCM and the copper loot of Zambia can be found
The report, released in January 2014 has caused shock waves in Zambia
and raised the debate on the way copper mining companies operate in
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
who became Vedants CEO in March, and has flown out to Zambia four times since February according to news reports.
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.
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.
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)
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.