Konkola Mines seeks court order to negotiate with creditors, as debts projected to reach over $4 billion by March

Konkola Copper Mines (KCM) is set to meet creditors to save Zambia’s largest copper mine from complete insolvency with its debt projected to reach US$4 billion by March, 2024.

This followed an exparte order granted to KCM by the Lusaka High Court to convene meeting of creditors to consider a scheme of arrangement.

Provisional Liquidator, Celine Meena Nair, in her submissions to the High Court stated that during the subsistence of the provisional liquidation and under the care of her predecessor, Milingo Lungu, the mines financial standing deteriorated.

Nair said KCM’s actual debt as at December, 2023 was in the region of US$4,183,488,281.37 but expected to rise to approximately US$4,303,746,454.82 by March, 2024.

She pleaded with the Court to grant the exparte order to allow KCM to enter into negotiations with its creditors to enable it service the debts over a period of time.

Nair said this would save KCM from collapsing completely.

She submitted that maintaining the company as a going concern would be in the best interests of all stakeholders

“That the discussions among the respondent, Vedanta, ZCCM-IH and myself acting for and on behalf of KCM have culminated into a recognition that KCM is highly indebted to several creditors and as at December 2023, the actual total debt of KCM was in the region of US$4,183 ,488,281.37 but expected to rise to approximately US$4,303,746,454.81 at the end of March 2024,thereby severally affecting the viability of KCM,” she submitted.

“It is hereby ordered and directed that the meetings of scheme creditors being Class 1 Scheme Creditors and Class 2 Scheme Creditors as defined in the Explanatory Statement and the Scheme Proposal and or other interested parties be convened by the Provisional Liquidator or the respondent in a manner convenient for purposes of discussing and considering a proposed scheme of arrangement hearing or until further order of this court,” Judge Charles Kafunda ordered.

According to the proposed Scheme of arrangement, Class 1 Scheme Creditors would be any Creditors which in aggregate with their affiliates hold claims the amount of which is less than US$1,000,000 whilst Class 2 Scheme Creditors would be any Creditors which in aggregate with their affiliates, hold claims the amount of which is equal to or greater than US$1,000,000.

London-listed Vedanta Resources is the majority shareholder in the mining firm which had been at the centre of a legal battle with the Zambian government since 2019.

The state-owned ZCCM-IH is a minority shareholder in KCM.

In 2019, ZCCM-IH commenced in liquidation proceedings in the Lusaka High Court after accusing KCM of violating its operational licence and evading taxes.

However, in September last year, government returned KCM to Vedanta Resources who pledged to inject US$1.5 billion into the mine.

On Thursday, Vedanta released US$25 million for workers salaries and contract labour.

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