Vedanta


Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version

By Geoffrey Kapembwa

March 26 (Bloomberg) — Zambia‘s parliament approved an amendment to the Mines and Minerals Act that will increase taxes and abolish existing agreements between the government and mining companies, the Zambian Chamber of Mines said.

The bill, which will be signed into law by President Mwanawasa on April 1, will lift royalties on sales fivefold to 3 percent and increase corporate income tax to 30 percent from 25 percent. That will raise the effective tax rate on miners to 47 percent from 31 percent.

The government’s “unilateral decision to dishonor existing development agreements” is disappointing, Fred Bantubonse, general manager of the chamber, said in a telephone interview from the capital, Lusaka, late yesterday. “This is arm twisting.”

Zambia, Africa’s largest copper producer, expects to earn $450 million in additional revenue this year from higher mining taxes as it seeks to benefit from the metal’s seven-year rally, Kolombo Mwansa, the southern African country’s mines and mineral development minister said on March 4.

The law will result in miners reconsidering any expansion projects because of poor returns, Bantubonse said.

“Any bad law always affects future investment,” he said.

Copper accounts for about 70 percent of Zambia’s export income and production has been rising since the nation sold off state-owned mines 1999, almost three decades after they were nationalized. The proposed increase in taxes comes amid record profits earned by companies including Vedanta Resources Plc., India’s largest copper producer, and First Quantum Minerals Ltd., a Vancouver-based miner of copper in Africa.

— Editor: Athol Bolleurs, Dylan Griffiths.

To contact the reporter on this story: Geoffrey Kapembwa in Lusaka via the Johannesburg bureau at +27- abolleurs@bloomberg.net.

Last Updated: March 26, 2008 06:44 EDT

Advertisements

Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version  

MUMBAI: The Anil Agarwal-controlled Vedanta Resources is close to increasing its stake in Konkola Copper Mines in Zambia to 79.4% by buying out a portion of the Zambian government’s holding.

The London-listed Vedanta, which owns 51% stake in Konkola, wants to increase the stake by buying out Zambia Copper Investments’ (ZCI) 28.4% stake in the largest copper mine there. The state-run ZCCM Investment Holdings holds 20.6% stake in Konkola.

“For the acquisition of 51% stake, Vedanta had paid $48.2 million in 2004. As the valuation of the copper mines doubled in three years, it will be curious to know how much Vedanta would be paying for ZCI’s stake,” said a source close to the development. Senior Vedanta officials said the process of acquiring the stake is on. They declined to reveal further details.

Vedanta has been discussing with ZCI the call option, which was agreed when Vedanta bought a 51% stake from the Zambian government in 2004. The company could not exercise the call option as the two parties failed to agree on the valuation of ZCI’s shares.

Adding fuel to fire, Zambian economists and investment analysts have voiced their opposition to Vedanta’s buy-out of national resource. ZCI has only Konkola stake as its asset at present. Vedanta chairman Anil Agarwal recently announced that the two parties had resolved their differences and that an independent valuation is in progress.

While ZCI chairman Tom Kamwendo was quoted by a Zambian daily, “With the resolution of differences over valuation, the next step for the company is to offer its interest to Vedanta.”

Vedanta shares were hoverng below 2,030 pence on London Stock Exchange on Tuesday, down 1.36% on speculation that ZCI may sell its stake through the Lusaka Stock Exchange. On November 23, the share had shot up 12% on market buzz that a Chinese mining company may buy out the promoters’ stake in Vedanta.

“ZCI’s shares in Konkola are being offered to Vedanta rather than being sold through the Lusaka exchange or sold in any other way because that is the provision of the legal agreement that was reached at the time Vedanta was acquiring its current 51% shareholding in Konkola,” said Mr Kamwendo. On public misgivings about the stake increase, Mr Kamwendo said such concerns were better resolved between the Zambian authorities and Vedanta.

Source: Economic Times