Zambia’s wettest mine, KCM, has been going under a dispute that has been silently raging in the courts of law, between Vedanta and ZCCM-IH, from May 2019, when the minority shareholders, ZCCM-IH, presented a petition for a compulsory liquidation in the high court of Zambia. The petition in the high court led to the appointment of a provisional liquidator by the court. This article is meant to give updates on the state of affairs of the dispute and as well, raise some questions to give readers something to think about.
Before the government, through ZCCM-IM, could make a petition application, they assigned a multifaceted team of technocrats to carry out an audit of the mine. As per the ministerial statement given by the mines and minerals development minister, Richard Musukwa, the team that was set up to audit the mine comprised of experts from mineral resources management, mineral processing, governance, labour issues, mining engineers, business administrators and lawyers from different institutions such as the government, academia, the legal profession industry and various universities in Zambia.
With the audit team finding issues that included; high indebtedness and threat of insolvency, non-compliance to the commitment to bring in Foreign Direct Investment, lack of investment to develop new Ore sources, failure to adopt cost-effective means of production as well as lack of a strategic plan to improve operations at the mine, the Zambian government seemed to have a case. However, in July of 2019 the South African high court ordered the Zambian government to halt the sale of Vedanta’ resources, a process which the high court of Zambia gave a provisional go-ahead. The order by the South African court was to be in effect until a final decision is made through arbitration. As expected, however, the Zambian government through the minister of mine and mineral development was quoted by Reuters as saying, “foreign judgments were not enforceable in Zambia until they were registered in local courts. The minister went further to say, “to that effect, it (the judgment) has no effect on the process that was going on in Zambia.”
The order by the South African high court came in after Vedanta sought an urgent order to prevent KCM from being wound up; arguing that the dispute should be subjected to arbitration which, if the Zambian government continues to pursue new investors, could not happen. As if to validate the ruling from the South African high court, recently, the Court of Appeal of Zambia, according to the statement by the provisional liquidator, ordered to halt the liquidation process so as to allow the owners Vedanta and ZCCM-IH to proceed to arbitration.
Thus, as it stands, the case between ZCCM-IH and Vedanta, the majority KCM shareholders, is going to arbitration. The question one would ask is; will the Zambian government and the people of Zambia at large be able to gain anything meaningful out of the arbitration? Is arbitration the best route that will ensure an equitable settlement for both parties involved?