Abu Dhabi’s most-valuable company eyes Vedanta’s Konkola Copper Mines in Zambia

The mining unit of Abu Dhabi's most valuable company, International Holding Company, has reportedly offered to buy a majority stake in Vedanta Resources’ Zambian copper assets. IHC is looking to build an African copper mining empire, and made an offer of over $1 billion to buy a 51 per cent stake in Konkola Copper Mines from Vedanta. 

According to a report in Reuters, IHC’s unit, International Resources Holding (IRH), before its offer to billionaire Anil Agarwal, had bought 51 per cent stake in Mopani Copper Mines in a deal worth $1.1 billion, and has plans to bid for a stake in Lubambe Copper Mine. 

Meanwhile, shares of Vedanta Ltd were trading lower today despite an uptick in equity benchmarks. The stock was last seen trading 1.08 per cent down at Rs 381.70. Bourses BSE and NSE have put the securities of Vedanta under the short-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

UAE’S GREEN PLANS

Oil-rich United Arab Emirates and Saudi Arabia are eyeing to secure critical metal supplies from Africa as they look to a transition to green energy. 

It remains to be seen if Vedanta would give up a majority interest in Konkola Copper Mines as it always wanted the assets on its balance sheet. The talks are reportedly ongoing. 

Vedanta has reportedly hired Standard Chartered to steer its plan to sell part of its 80 per cent stake in Konkola Copper Mines. It wants to raise capital to revive the assets that were almost paralysed in an ownership dispute with the government in 2019. The Zambian government owns 20 per cent of KCM. 

Standard Chartered has reportedly issued a request for proposals seeking investors interested in buying a minority interest in KCM, but IRH wants to have a controlling stake as it does not see clear benefits of becoming a passive investor. 

Vedanta told the agency that Standard Chartered was assisting in a broader strategy to manage its capital structure and ensure that the company has the funds necessary to meet its obligations and continue operations again. It acknowledged “engaging with prospective partners for both short-term financing and longer-term equity financing”.

KONKOLA COPPER MINES’ TROUBLED LEGACY

Vedanta recently regained control over its assets after a prolonged legal battle with the previous Zambian government that had seized the copper mines and smelting plant, accusing the company of not investing in the expansion of copper production. The legal disputes, which began after the government's forced liquidation of KCM in May 2019, nearly led to the operations' standstill due to a lack of fresh capital. Vedanta's CEO Chris Griffith announced in February that the company aims to raise about $1 billion for investing in these assets over the next five years, and an additional $300 million to clear local creditors. 

Despite a surge in copper prices likely to stimulate investors' interest, tough conditions like removing groundwater from the Konkola Deep underground operation could deter them, an anonymous source revealed to the agency.