File Photo: A video of Anil Agarwal in March 2014 revealed how he bought KCM for just $25m but claimed it was giving him $500 every year in profit at the time he declared losses, so why re-engage Vedanta with it's dark past?
Vedanta says it made good profits when global copper prices were only $4,000, so with prices around $8,500, profitability is expected to be much higher. Vedanta’s narrative in Zambia was different, declared losses and today says it will only be profitable after four years.
Compiled by Mpandashalo Mwewa.
Lusaka, Sept. 14 – Last week, Vedanta Resources Limited (Vedanta) said it would restart copper operations after a government decision in favour of the company. The metal and mining giant, in a statement, said that the ownership and management of Konkola Copper Mines (KCM) has been returned to the company following a historic decision by the new dawn government.
Vedanta Resources chairman, Anil Agarwal, took to X (formerly Twitter) and wrote that the return of KCM to Vedanta came at a perfect time.
“Copper is a key metal for world’s decarbonization. Demand is growing rapidly. In India, growth is over 20% annually. Vedanta acquired KCM in 2004 and made good profits when global copper prices were only $4,000. Now, global copper prices are around $8,500 and technologies are much superior so profitability will be much higher,” Agarwal reiterated.
He further called on the need to maximise synergies between KCM and Vedanta Ltd’s refining or smelter businesses in UAE and India.
“We can create a fully integrated copper vertical and eventually, a successful global copper company, like Chile’s Codelco and Mexico’s Southern Copper. We have other big projects coming up in the copper blocks that we have won in auctions and smelters in international geographies,” he added.
How KCM with resources and reserves of 16 million tonnes of contained copper has been a bargain beats many. KCM has a copper grade of 2.3 per cent. Ties between Zambia and Vedanta soured after former President Edgar Lungu’s government orchestrated the seizure of the KCM assets and forced liquidation in May 2019, accusing the Indian company of failing to meet plans to invest in increasing mining output.
“Vedanta will return to run and resuscitate the operations of KCM as the majority shareholders,” Paul Kabuswe, Zambia’s Minister of Mines and Minerals Development, was quoted as saying.
Also Read: The decision to re-engage Vedanta reeks of corruption!
Amid this euphoria, shares of Vedanta Ltd. made a new 52-week low of Rs 230 on Tuesday, ending 3 percent lower. With Tuesday’s drop, the stock has declined in five out of the last six trading sessions.
Vedanta’s shares are now down 27 percent so far in 2023. The stock had declined another 10 percent in 2022. Shares had doubled in value in 2021 riding on a strong commodity cycle and Anil Agarwal-led promoters partially increasing their stake in the company.
Vedanta has repayments worth $3.6 billion lined up in financial year 2025, including those to banks, bondholders and inter-corporate deposits.
Technical analysts are anticipating further weakness in the company’s stock price and are advising traders to avoid fresh long positions as of now.
Only three out of the 14 analysts that track Vedanta have a buy rating on the stock. Five of them have a hold recommendation, while six are advising investors to sell the stock.
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