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No serious investor can buy KCM in its current state

Dear Editor, 

VEDANTA and the Zambian government have been in a legal dispute over the mine and smelter since May 2019 when, Government, which owns 20 percent of KCM through ZCCM-IH, handed control of the business to a liquidator, Mr Milingo Lungu.

Some aspects of the dispute are before the High Court, Court of Appeal and Supreme Court in Zambia.

Other aspects are before High Court, Supreme Court in South Africa.

Meanwhile, on one hand, the provisional liquidator, Mr Milingo Lungu split KCM into two units, KCM SmelterCo Limited and Konkola Mineral Resources Limited, which he wants to sell. 

On the other hand, Mr Lungu is appearing before court accused by Government of stealing KCM money.

Furthermore, Vedanta claims it has invested $3 billion in KCM since 2004. It also claims that it wants to open a dialogue with ZCCM-IH and has committed to investing an additional $1.5 billion into KCM. 

With all these unresolved issues, any potential buyers must be wary of legal complications, particularly that Vedanta is calling the liquidation and split illegal, and considering that the arbitration between Vedanta and Zambia is ongoing in London, side by side with active court cases in Zambia and South Africa.

I therefore do not think that a sale is feasible at the moment. Any arbitrary action to sell KCM will surely result in Government compensating Vedanta not less than $4.5 billion. 

Already, as President Hakainde Hichilema stated a couple of days ago, Government is grappling with a $7 billion debt to local contractors, most of which is compensation for bad decisions. It would be utter foolishness to continue making the same mistakes.

SINKAMBA PETER.

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