KCM in liquidation
By Staff Reporter
THE Lusaka High Court has placed Konkola Copper Mines (KCM) under liquidation with Lusaka lawyer Milingo Lungu of Lungu Simwanza and Company appointed as provisional liquidator.
And the Mine Unions yesterday staged a solidarity demonstration in support of government’s move to take over Konkola Copper Mines in Chingola and Chililabombwe.
The liquidation action follows an application by ZCCM Investment Holdings Plc, a shareholder and member of KCM to wind up the mining giant because it was insolvent and has failed to pay outstanding invoices to suppliers and contractors as and when they fall due.
According to documents filed in court, ZCCM Investment Holdings Plc acting chief executive officer Mabvuto Chipata has stated that his firm has lost confidence in the management and conduct of KCM‘s affairs.
ZCCM-IH stated in its petition that KCM be wound up and they be granted an order to appoint Lungu as provisional liquidator as there was a real likelihood that the major stakeholder, Vedanta Resource Holding Limited may strip and dissipate the assets of the company, pending the hearing of the winding up petition.
Chipata alleged that KCM was engaging in massive tax evasion through transfer mis-pricing and other unscrupulous means.
He also accused KCM of failing to run the mining areas in Chingola and Chililabombwe and carry out mining operations in breach of section 35(10 (b) of the Mines and Minerals Development Act 2015.
Chipata added that Vedanta’s management practices have led to the company being technically insolvent and financially distressed as it is failing to pay debts.
And Lusaka High Court judge Anessie Banda- Bobo has since granted ZCCM-IH an ex-parte order appointing Lungu and ordered that he would have powers to carry on the business of KCM so far as it is necessary for the beneficial winding up.
Judge Banda-Bobo stated that Lungu shall make any compromises or arrangements with creditors and make any agreement on all questions in any way relating to or affecting the company or its assets.
She further ordered that Lungu shall take possession, custody and control all the assets of KCM and bring or defend any action or legal proceedings in the name and or on behalf of KCM.
The judge stated also that Lungu shall dispose assets by public tender or in the most transparent manner under the circumstances as well as sell the real and personal property and the things in auction of the KCM and public auction public tender or private contract.
It was further ordered that Lungu shall execute in the name and on behalf of KCM all deeds, receipts and other documents and for that purpose use where necessary the company seal and appoint a legal practitioner of other agent to undertake any functions which the liquidator is unable to perform personally.
Meanwhile, Chipata stated in his facts verifying facts that in November 2004, the Government concluded an agreement to sell 51% of KCM to Vedanta Resources Holding Limited, an Indian owned company listed on the London Stock Exchange.
He stated that it was agreed that Vedanta shall subscribe to ordinary shares equivalent to US$25 million representing 51 per cent of the shares and that to enable Vedanta to subscribe for KCM shares, it was agreed that Zambia Copper Investment (ZCI) and ZCCM-IH would waive their pre-emptive subscription rights and ZCI was to receive a deferred consideration at US$23.2 million from Vedanta payable over a period commencing on the completion date of the Vedanta investment and ending December 31, 2008.
He stated that Vedanta agreed to pay US$16.8 million and ZCCM-IH was due to receive for the diminution of its shares from 42 to 26 per cent which amount was not received.
Chipata added that since Vedanta took over the central management and administration of the company, it has failed to manage the company in the interest of all stakeholders as it has only declared dividends in the years ended 2007, 2008, 2009, 2012 and 2013 but has neglected or refused to pay the dividend without justifiable cause or excuse.
The High Court has set Friday for inter-parte hearing of the case.
Meanhwile, mineworkers unions were later joined by different stakeholders, miners, ex-miners and residents of Chingola and Chililabombwe to petition government to quickly find other investors to take over operations at Konkola Copper Mines.
Mineworkers Union of Zambia president, Joseph Chewe charged that Vedanta Resources had failed the people of Chingola, Chililabombwe and Kitwe.
Chewe led a group of youths and other three union leaders in a solidarity walk to deliver a petition letter to Copperbelt minister Japhen Mwakalombe at the District Commissioner’s office in Chingola.
Chewe lamented that the unions have suffered at the hands of Konkola Copper Mines and advised government not to bring in Chinese to run the mines but look at other serious investors.
“We have come to deliver this petition, we heard what the President said and we are in support of what he mentioned. It is for this reason that we want Vedanta to go; time for them to pack is now, we are tired. Enough is enough, we can’t continue like this,” he said.
Chewe said that there was need to consider fencing off Konkola Copper Mines until another investor was identified.