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Sale of Mine to Vedanta Questioned by Zambian Citizen Groups
Kingsley Kaswende
The Lusaka Post
November 10, 2004
Lusaka: The Citizens Forum has said it is distressed and angry at
the sale of Konkola Copper Mine (KCM) by the government to Vedanta
and has demanded full disclosure through a public enquiry or tribunal
on the sale of Zambia's largest mining group.
Citizens Forum spokesperson Gilbert Temba yesterday said President
Levy Mwanawasa personalised the sale of KCM.
Temba said since July 2004, the Citizens' Forum sought to engage government
in the debate and discussions over the intended sale of KCM to the
Indian Company.
He said in that effort, the Citizens Forum undertook extensive research
and study both on the Vedanta and in the manner in which the intended
sale was being conducted.
"The Citizens Forum did not only reveal the findings to the public
through The Post and painstakingly explained the findings to the President,
Mr Levy Mwanawasa who for unknown reasons had personalised the sale
but also sought to take personal responsibility over the sale," he
said.
Temba said the Citizens' Forum research and investigation had revealed
that the intended sale lacked transparency and was not exposed to
debate or discussion by the Zambians.
He said the search for a strategic partner by Standard Bank (UK),
which was commissioned by the World Bank, was not credible.
"There was undue pressure from the World Bank for its own interest
to close the sale, to any foreign investor however bad the transaction,"
he said.
The research also revealed that the search for the strategic equity
partner lacked full disclosure and adequate prospectus essential and
critical in the sale of a public asset of that magnitude.
Temba said Vedanta was a very doubtful company both in mining and
the performance of its shares on the London Stock Exchange, and that
generally it lacked mining experience.
"(The research revealed) that Vedanta had not made any substantial
financial investment commitment either in the existing Konkola Mine
itself or in the Konkola Deep," he said.
"That put together with the good performance of KCM, the increase
in production and copper prices and the general intrinsic value of
the mine and Konkola Deep had raised the value of KCM considerably."
Temba said the Citizens Forum had sought delay in the sale of KCM
to enable the government reassess the overall status of KCM, and to
visit some of the observations and the findings the Citizens' Forum
had exposed on the sale.
But Temba said President Mwanawasa, in his correspondence to the Citizens'
Forum, "rudely and dismissively" ignored the genuine concerns of the
Zambian people and went ahead with the sale of KCM at a ridiculous
price of US $ 25 million, which at today's KCM operations is equivalent
to its monthly profit.
"The Citizens' Forum is not exposed or aware of any other benefits
or motives and reasons for the action of the President and the government
in conducting the affairs of our nation in this manner," Temba said.
"In order therefore that full considerations are given to the Zambian
people, the Citizens Forum demands full disclosure through a public
enquiry or tribunal on the sale of KCM to Vedanta."
The Citizens' Forum adds to a string of voices that have expressed
displeasure at the sale of KCM, including the opposition and shareholders.
Meanwhile, Zambia Copper Investments (ZCI) has been obliged to cancel
its listing on the London Stock Exchange (LSE) as a result of the
majority acquisition of shares by Vedanta in KCM.
Vedanta acquired sufficient new KCM ordinary shares, obtaining a 51
per cent interest in the largest mining group in Zambia.
Accordingly, ZCI's interest in KCM, reduced from 58 per cent to 28.4
per cent.
While ZCI's primary listing on the Johannesburg Securities Exchange
(JSE) and its secondary listing on the Paris Bourse will continue,
the transaction impacted ZCI in respect of the conditions for listing
on the London Stock Exchange.
As a result of the transaction, ZCI will no longer exercise control
over a majority of its assets and was obliged to cancel its listing
on the London Stock Exchange as of November 4.
ZCI is also expected to cancel the secondary listing of ZCI's ordinary
shares on the London Stock Exchange with effect from December 2, 2004.
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