All data are collected in the Fiscal Year of 2008-2009.

Zambia / Energy, Mining, Resources

Vedanta Resources is a LSE-listed diversified FTSE 100 metals and mining company, and India’s largest non-ferrous metals and mining company based on revenues. The company operates in India, Zambia and Australia, with extensive interests in aluminium, copper, zinc and lead.

The business was founded by Indian billionaire Anil Agarwa in 1976 as Sterlite Industries. Vedanta Resources was established in 1986 to bring together a variety of businesses owned by the Agarwal family including Sterlite Industries. Vedanta Resources was first listed on the Bombay Stock Exchange in 1988 and on the London Stock Exchange in 2003, the first Indian manufacturing company to be listed on the London Stock Exchange.

Other subsidiary companies owned by Vedanta Resources include Hindustan Zinc Limited, Bharat Aluminium Company and Madras Aluminium Company. Vedanta Resources also has a major stake in iron ore exporter, Sesa Goa.

In 2004 it acquired a 51% stake in Konkola Copper Mines in Zambia. Prior to 1970, Anglo American Corporation and Roan Selection Trust owned the mines. After negotiations between the Zambian Government and the two mining groups, the mines were reorganised into Nchanga Consolidated Copper Mines Limited (NCCM) and Roan Consolidated Mines Limited (RCM). Through the Mining and Industrial Development Corporation Limited (MINDECO), the Government acquired a 51 per cent interest and Zambia Copper Investments (ZCI) acquired the remaining 49 per cent in NCCM. Mindeco's 51 per cent shareholding in NCCM was transferred to ZIMCO in September 1974. The Government acquired 51 % shares in RCM. The Roan Selection Trust, ZCI and the general public held the rest.

In April 1981, RCM and NCCM were merged to form a conglomerate called Zambia Consolidated Copper Mines (ZCCM). A privatising programme was completed on 31 March 2000 when ZCCM assets were bought by Mopani Copper Mines plc and Konkola Copper Mines plc. Anglo American plc acquired a 51% shares in KCM. In September 2002 Anglo America, IFC and CDC withdrew as shareholders of KCM, leaving a restructured company whose main shareholders were ZCCM IH and ZCI. In November 2004 Vedanta Resources became the major shareholders in KCM with a 51 percent share in the Company

Stand M/1408, Fern Avenue Chingola, Zambia
Telephone Number: 260 212 350 000

Vedanta is primarily engaged in copper, zinc, aluminium and iron ore businesses, and is also developing a commercial power generation business.

Vedanta employs over 29,000 people in various locations.

Revenue from its businesses increased from US$3,701.8 million in fiscal 2006 to US$6,578.9 million in fiscal 2009, representing a compound annual growth rate of 21%.

Konkola Copper Mines Plc (KCM) is the largest mining and Metals Company in Zambia with annual capacity of 200,000 metric tonnes of copper. KCM operates the Konkola and Nchana open pit copper mines, the Numpundwe pyrite mine and a copper smelter. Together these mines account for approximately 67 percent of Zambia’s total metal output.

To become a million-ton per annum producer at the lowest decile costs in aluminium, copper and zinc and sustaining a global leadership position in non-ferrous metals with high quality assets and providing superior returns to shareholders.

The company is pursuing a four pillar strategy: to optimise the performance of existing assets, primarily through low cost production; delivering industry leading organic growth; consolidate minorities and rationalise the group structure. For instance in 2008 the Group increased its holding in MALCO, Sesa Goa and Sterlite and in April 2008, it acquired ZCI’s 28.4% stake in KCM, taking total shareholding to 79.4%; and to leverage existing skills and look for additional investment opportunities.

Vedanta owns 79.4% of KCM’s share capital and has management control of the company. KCM’s other shareholder is ZCCM Investment Holdings Plc. The Government of Zambia has a controlling stake in ZCCM Investment Holdings Plc. An offshore trust registered in Bermuda, Zambia Copper Investments, owns 28% of the copper and cobalt produced at KCM, while Zambia’s state mining company, ZCCM Investments, owns the remaining 21%. An organization called The Copper Development Foundation has a 44% stake in Zambia Copper.

For the past few years, Vedanta has been accused of not only violating local and international labour laws and guidelines and poisoning local environments, but that that management has made political corruption and the granting of secret, extremely favourable share deals with politicians a mainstay of its acquisition strategy. These accusations also surfaced in Zambia and company management subsequently came under fire from academics, prominent citizens, and the government in Zambia. It was singled out by former President Levy Mwanawasa when he announced his mining fair labour practices law.

Vedanta paid US$25 million for the mine and property and was granted an eight-year tax holiday. In its first subsequent March 2005 financial report, it was revealed that management had repatriated US$26 million in KCM profits to its Swiss accounts in the final quarter of 2004 alone.

Commenting on the release of the financial report at the time, Jean-Pierre Rozan, president of the Association of Minority Shareholders of Zambia Copper Investments, a minority KCM shareholder, said that the Indian group “bought for a few peanuts a company that is worth billions.”

Added University of Zambia development studies lecturer Dr. Frederick Mutesa, "The deal reveals two things: either the incompetence of those who negotiated the agreements, or some form of collusion or self-interest."

Vedanta provided for windfall tax at a rate of 25% above the minimum threshold limit in 2009. The company had discussions with the government on this matter and the government then announced withdrawal of windfall tax with effect from April 2009. KCM received a letter from the Zambian Revenue Authority (‘ZRA’) during 2008 confirming that the company will only be required to pay windfall tax at a rate of 25% at any price above the first threshold.

On 30 January 2009 the Minister of Finance of the Zambian Government published the 2009 budget. There were positive changes to the mining tax regime announced including: abolition of the windfall tax; increase in the capital allowance back to 100%; and set-off of hedging losses against mining profit was prohibited in FY 2008-09. This prohibition has been removed in 2009-10 and onward. The 2009 changes took effect on 1 April 2009.

Since Vedanta Resources Plc became the majority shareholder in Konkola Copper Mines in November 2004, a number of projects have been implemented with the ultimate aim of expanding the production capacity of the operations, improving efficiencies as well as extending the life of mine. In this regard the new sulphur based Acid Plant at Nchanga, with a production capacity of 500 tonnes of sulphuric acid a day, has been completed and has started production; the Nchanga Tailings Leach Plant Tankhouses, which produce cathode copper, have undergone refurbishment to improve operational efficiencies and enhance the quality of copper; the Konkola Deep Mining Project (KDMP) aimed at expanding the production of copper ore at Konkola Mine is underway. This involves the sinking of a new mine shaft to the depth of 1 490 metres, the deepest new shaft sinking project in Africa. Mid-shaft commissioning is expected by mid FY 2010 The remaining infrastructure, including the bottom crusher, loading station, deepening of Number 1 shaft, and the 1,390 metre level pump chamber will be completed by end CY2011; and the new Nchanga smelter was commissioned and is expected to achieve its rated capacity by Q2 FY 2010.

In a bid to drive change through innovation, KCM emerged with a new development in the metallurgical complex by recovering cobalt from the process molten slag in form of an alloy of copper, iron and cobalt. This is achieved through the adoption of a two stage electric slag-cleaning furnace system - the first of its kind. The cobalt alloy production at peak rate is expected to be 70tpd and Vedanta expects to have a cobalt recovery of 37% and produce about 4.4 tonnes per day of cobalt in the form of cobalt copper alloy.