Wolves smell blood on KCM take over

Wolves smell blood on KCM take over

 

By Chishimba Kambwili

The announced take over of KCM by the government has been greatly welcomed by the NDC. This is a call I have led as NDC President and President Lungu has merely followed. The people of Chingola and Chililabombwe have suffered enough at the hands of this investor. Vedanta resources should have actually been gone many years had Zambia been in the hands of capable and honest leadership. The government of Edgar Lungu only took this decision because I have talked about this matter and during my recent visit to Chingola I strongly advocated for this move to take over the mine because our People were getting a raw deal and the government was clearly being taken for a ride by Vedanta. President Lungu despite being in bed with Vedanta Resources was left with no option but to succumb to the pressure I had created and he noticed the growing anger of the people.

However, what is shocking are the events that have surrounded and followed the take-over of the mine.

Firstly it’s clear the President did not want to take over this mine from his freinds as can be seen from his statement at Simon Mwansa Kapwepwe Airport recently where he said that because the people are the ones who demanded that Vedanta is sent packing he would get rid of them. This was meant to show his Vedanta freinds that it was never his wish to separate with them. Hence the trickery that is now unfolding on how this ‘take-over’ is being conducted.

The President announced that the separation with Vedanta resources will be done according to the law and that he had instructed the Attorney General to commence the process. As far as we understand there is an arbitration procedure to be followed under the agreements between government and Vedanta. Alas President Lungu in trying not to be suspected by his Vedanta friends has decided to use treachery in dealing with the matter; steps in ZCCM-IH.

To our dismay, this morning we were greeted with news that the ZCCM-IH has appointed a provisional liquidator in the name of Milingo Lungu a known member of the PF legal team to be the Liquidator of the mine. ZCCM-IH is a wholly owed government parastatal. So it is without doubt that government is behind this decision to appoint this Liquidator.
We are also aware that a scheme is being hatched between the Attorney General and the Liquidator to enter into a Consent Order to preempt and defeat the arbitration process. Anyway that is Vedanta’s baby.
My concern is how the interest of the people of the copperbelt will not be served with this process and how the wolves are rounding up on this ‘carcass’.
As NDC we find this liquidation development shocking and suspicious. It’s clear that the wolves have smelt blood and they want to suck the mine assets dry and share proceeds. This is an opportunity to strip the mine by known friends of Mr Lungu who belong within the inner circle of state house. It is also interesting to note that out of all known mining experts and engineers this country has been blessed with, government decided to settle for little know PF lawyer Milingo Lungu with no proper background whatsoever in the mining sector.

2. Liquidation

There is no doubt that liquidation is the worst option to pursue, but as indicated it is a deliberate move by those within state house to have control of the looting. This they will do by managing the Liquidator on which creditors must be paid first and they get commissions from that.
As any legal expert knows, in a liquidation their is a legal parking order on how the debts need to be settled by the Liquidator. The liquidators fees are paid first, then taxes and debts owed to statutory institutions. This will then be followed by money owed to secured creditors, usually financial institutions. We are aware that KCM owes over US$ 1.5 billion to financial institutions. So these debts to banks have to be paid second.

So where does this leave the poor sub contractor and miner? In a liquidation, payments to employees and subcontractors will be among the last to be paid.
So if the puporse of taking over the mine was to rescue the people of the copperbelt from Vedanta because they were not being paid on time, how does liquidation help them?
We are, therefore, at pains to understand how the sub contractors and the employees will be paid with this process President Lungu has set in motion using ZCCM-IH. How will this broke government look for money from the treasury to pay the miners and sub contractors when they are failing to pay salaries? How long will the miners and subcontractors have to wait now that the mine is in liquidation.
To begin with its unlikely there is any money in the local KCM bank accounts as most of these mines don’t keep liquidity here and mainly rely on overdrafts for operational expenditures. So what funds will the Liquidator use to pay creditors? In addition, auctioning of the mining equipment to raise the needed funds will be impossible because most of the mining equipment is not owned by KCM but subcontractors who actually do the mining. Simply put there will be no money to liquidate the 2 billion dollar debt that KCM currently owes. Therefore, cry our beloved people of chingola and chililabombwe because there will be no money coming soon from that mine or sale of it’s assets atleast. Unless government puts in money but we don’t see that happening. Had the government decided to nationalise the mine and appoint managers, there would be justification to get money from the treasury.
As NDC we could have opted to either
a) Go through with the legal termination process as contained in the agreements with Vedanta or;
b) nationalise the mine and appoint competent Zambians to run it until such a time a suitable investor is identified
c)or place it under receivership to carry out a business rescue operation

Overall, this a clearly irrational decision by the PF government to counter my statements and preempt our plans as NDC on KCM. But they have made a huge blunder in which the employees and the business community will suffer as there is little or no hope for them to get their benefits and payments. As far as I am concerned KCM is capable of paying the debt owing and there was absolutely no need to liquidate the mine. As NDC among the money options indicated, we would have first demanded that they settle the debt and immediately after take over the mine, appoint compentent Zambians to manage it while awaiting the identification of a suitable investor

The only likely outcome of this liquidation is that Mr. Milingo Lungu and his ‘brother’ Edgar Lungu will strip this mine of its assets and there will be nothing left and the next thing we will be told is the mine will be sold for K1 to a Chinese investor because its not worth anything! Thats how KCM was sold for a song to start with. Secondly we have seen these liquidation schemes before, they don’t work it happened in Luanshya. I cry for my People but they won’t cry for long, NDC led by Imbwili is on the way.

Dr. Chishimba Kambwili.
NDC PRESIDENT

Share this post