A coalition of civil society organisations championing the revamping of the mining industry has described the commitment by Vedanta Resources to pay off debt owed by Konkola Copper Mines (KCM) to suppliers as a progressive development.
Vedanta Resources Limited had announced that it was ready to pay US$250 million owed to suppliers in Zambia as soon as it resumes control of copper mines that were seized by the Zambian government more than four years ago.
Coalition member, Samuel Banda, told journalists on Saturday that the commitment and assurance that Vedanta Resources would settle all debts owed to suppliers was welcome as it may help revamp the mining industry.
“As you may be aware, local contractors and suppliers on the Copperbelt have their businesses limping and some of them have shut down due to the non-functionality of KCM which has continued actually to impact our economy negatively.
“We want to indicate that apparently KCM is facing financial constraints and this is the reason why they are not able to pay to clear off the debts that they owe some suppliers and contractors,” Banda said.
He argued that the shut down of the businesses had resulted in the creation of mass unemployment on the Copperbelt.
Zambia Monitor had reported an economist, Lubinda Haabazoka, recently as saying that the downgrading of Vedanta Resources to negative from stable by S&P Global Ratings was a signal that the company may not be a good partner to take up the ownership of KCM.
S&P Global Ratings cut its outlook on Vedanta Resources, parent of Indian metals-to-oil conglomerate Vedanta Ltd (VDAN.NS), to “negative” from “stable,” citing increased funding risks.
Commenting on this development, Haabazoka said it entailed that the company would have to borrow against its indebtedness to invest in KCM.
Haabazoka argued that downgrading of Anil Agarwal-owned company was a signal from independent rating agencies that the company was not having a good time.
“The rating depicts the financial health of the company. They look at the indebtedness, its ability to meet its obligations in terms of liquidity ratios and other assets. So downgrading of Vedanta is a signal that it might not be a good partner for KCM,” Haabazoka said.
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