Vedanta agrees to suspend lawsuits over Zambia copper mines

Konkola Copper Mines was placed under provisional liquidation after the previous Zambian government accused parent company Vedanta of lying about expansion plans and paying too little tax. Vedanta has denied any wrongdoing. The company has said it wants the mines back and has pledged to invest about $1.5 billion to revive the operations.

“Vedanta has always been of the view of resolving the matter outside court without litigation and finding an amicable solution to protect the national asset,” its Chief Executive Officer Sunil Duggal said in an emailed reply to questions on Tuesday.

The same day, Vedanta brought a new legal challenge in the Lusaka High Court to the government’s appointment of a new provisional liquidator at KCM, according to court documents seen by Bloomberg. It was unclear if that lawsuit will now also be put on hold.

Zambian President Hakainde Hichilema, who took office last August, is seeking to repair relationships with mining companies in a bid to attract more foreign investment to Africa’s No. 2 copper producer. Rebooting production at KCM is central to his ambitions to more than triple output within a decade. While Hichilema has also agreed to suspend legal action, his government hasn’t committed to restoring control of KCM to Vedanta.

Opinion is divided over whether to allow Vedanta to return, Mines Minister Paul Kabuswe said in an interview at the Investing in African Mining Indaba conference in Cape Town on Tuesday.

“If ever they were to come back, and please underline the ‘if ever,’ there would be very strict conditions,” Kabuswe said. He didn’t specify what the conditions would be.

The cases remain before the courts and could be resuscitated should negotiations fail, according to Kabuswe. While other companies are interested in KCM, they can’t invest while the legal dispute continues, he said.

“Our policy and our ambition as government is that we need to unlock every asset that was shrouded in some kind of legal battle,” he said.

Duggal didn’t respond to allegations that Vedanta had failed to pay contractors and uphold decent working conditions, but said the company had invested $3 billion in Zambia since 2004 and created 12,000 jobs.

“We wish to reiterate and pledge our unequivocal commitment to the development of the mine and increase production capacity,” the CEO said. Vedanta was also committed to social infrastructure programs and improving worker salaries, he said.

Vedanta will pay KCM suppliers as much as $220 million that was due at the time the provisional liquidator was appointed, give workers 20% wage increases and cash bonuses, the company said in a May 5 letter to Kabuswe. It will also spend $1 billion to complete an expansion project that started in 2008, Vedanta said in the letter seen by Bloomberg News and verified by the company.