In the labyrinth of litigation risks, the recently announced Konkola Copper Mines (KCM) restructure into a smelter and mineral resource business has suffered a snag after a Zambian High Court issued an ex-parte order in favor of Vedanta the majority shareholder in the entity. Earlier in the year KCMs liquidator had announced a re-organizsation that would see the business split into Konkola Smelter Company Ltd and Kokonla Mineral Resources Ltd.
However because the restructure was announced in a period where the parties where still in arbitration process, Vedanta Resources Holdings, Vedanta Resources (Jersey) Ltd and Vedanta Resources Ltd sued the liquidator in his personal capacity and successfully obtained an ex-parte order delivered by Justice Dr. Winnie Mwenda, that ring fences the mining assets thereby blocking the liquidator for proceeding with the re-organization.
The order restrains the liquidator or agents, whomsoever and its senior management from undertaking or participating in any reorganization pending determination of the arbitration proceedings.
Africa’s copper producer has been on a path to increase shareholding in key mines as stipulated in its economic recovery plan (ERP) for 2020-2023. The Southern African nation just announced completion of a transaction that has increased its stake to 100% in Mopani Copper Mines (MCM) after a $1.5billion loan takeover agreement following the exit of Glencore Corporation and First Quantum Mining represented by Carlisa Investment Corporation Ltd.
Zambia is in the middle of talks with the International Monetary Fund (IMF) for a fully funded program following deterioration in its fiscal posture as external debt ballooned to $12.97billion. The red metal producer skipped a $42.5million coupon payment on its 2024 dollar bond in November 2020 becoming the first African nation to default in COVID era.
The Kwacha Arbitrageur
