By AARON CHIYANZO
KONKOLA Copper Mines (KCM) has been financially insolvent since 2014 resulting in the liquidation of the mine, KCM liquidator Milingo Lungu has said.
Mr Milingo said the mine was currently under liquidation because its financials had been in a mess for some.
Recently, Mines Minister Paul Kabuswe described as a mess the current financial and operational challenges at KCM.
Mr. Kabuswe said the politicisation of KCM by the PF government went overboard and that the giant mine almost became a political party after liquidation.
But Mr Milingo said the financial mess at KCM was not new and that it was a problem created before the liquidation of the mine.
He said KCM had been financially insolvent since 2014.
“KCM has been financially insolvent since 2014 and it is the reason the previous Government decided to put it on liquidation,” Mr Milingo said.
Mr Milingo said he would engage the new minister so that he understands his plans on reviving KCM.
He said he was ready to work with the new government in ensuring that KCM was brought to life.
In 2013, KCM’s total liability stood at US$1. 567 billion exceeding the current assets by US$123 million, making it difficult for the mine to meet its obligations as they fall due.
KCM also defaulted on a Standard Bank loan which it acquired to the tune of US$700 million.
The bank gave a waiver up to March 31, 2014, beyond which it could appoint a receiver if conditions of the waiver were not complied with. The loan in question was secured on all KCM assets.
It was also discovered that in 2011, Vedanta Resources loaned in excess of US$500 million to be repaid in 2012, but this loan was prematurely recalled in September 2011.
Despite having financial challenges, the major shareholder went ahead and recalled the loan.
Vedanta Resources Plc had also not complied with its commitment to inject US$397 million into KCM as Foreign Direct Investment. Instead, funds which were generated within KCM, which in normal circumstances would be used for operations, were diverted to finance capital projects.
As a result, he said, operations were starved of the necessary maintenance funds and resources.
KCM is under provisional liquidation, a process that was initiated by ZCCM-IH, a minority shareholder, which presented a petition for compulsory liquidation in the High Court on May 21, 2019.
The petition included an application for the appointment of a provisional liquidator. The appointment of a provisional liquidator was prompted by the need to protect assets in the interim period between the presentation of the petition and the determination of the matter.
