Vedanta Resources PLC plans to oppose an application by ZCCM Investments Holdings PLC to liquidate Konkola Copper Mines PLC, asking the Zambian high court to allow it to join as an interested party, it said in a statement.
The mining company Vedanta has questioned the motives for state-owned ZCCM's application saying it was not a major creditor of KCM and that the petition for winding-up KCM under the Corporate Insolvency Act deals with a broad range of issues relating to KCM, not all of which related to the solvency of the business.
The application came soon after an announcement that KCM would be closing down some of its Zambian operations. Vedanta said in a May 21 statement that exponential increases in taxes, duties, fuel and power costs had placed an enormous and unaffordable burden on KCM. "The most recent restrictions and duty on concentrates have negatively impacted the running of the smelter and the much needed acid to run its operations," it said.
The Zambian high court ruled May 21 that law firm Lungu Simwanza & Co. will act as provisional liquidator until the conclusion of the hearing of a petition brought by KCM minority shareholder ZCCM, or until further ordered. Efforts by KCM to meet with the Zambian government to discuss the fate of the copper mine has so far been unsuccessful.
Aiming to reduce debt, Zambia has introduced new mining duties, increased royalties and plans to replace the value-added tax with a sales tax by April. Miners have opposed the move, warning that it may lead to about 21,000 job losses and US$500 million in capital expenditure cuts over the next three years.