Vedanta Resources Ltd. launched international arbitration against the Zambian government after Konkola Copper Mines PLC was placed into provisional liquidation, the company said May 31.
Vedanta said it had notified the Zambian government and state-controlled Zambia Consolidated Copper Mines Investment Holdings on May 30 that they were in contravention of a 2004 shareholders agreement relating to Konkola Copper Mines, or KCM, that provides for disputes to be submitted for international arbitration in Johannesburg.
The company had to apply to be made a party to the liquidation proceedings in Zambia that were initiated by state-owned ZCCM Investments Holdings PLC, which owns 20% of KCM, after the matter was heard because Vedanta, the biggest shareholder, had not been notified of the application. Vedanta has been made a party to the proceedings and will be allowed to make its case when the legal action resumes June 4.
KCM operates the Konkola mine and other assets in Zambia.
According to Vedanta, the Zambian government said during talks May 29 that it had not entered into any sales agreement with parties interested in buying KCM.
People familiar with the situation recently told Bloomberg that China Nonferrous Metals Co. Ltd. and Eurasian Resources Group SARL had expressed an interest in buying the company.
However, Andrey Belov from Eurasian Resources' press office told S&P Global Market Intelligence that "ERG has no interest, nor has it ever had an interest, in acquiring Konkola Copper Mines."
Zambia has said its decision to take action against KCM was the result of breaches of environmental and financial regulations. Vedanta said there were no major tax claims against the company at the time the provisional liquidator assumed management of KCM. The company went on to say that allegations made in respect of environmental and financial breaches were not raised until the liquidation hearing as the motivation for Zambia Consolidated Copper Mines' actions.