ZCI shares valued - would a Vedanta buy-out shortchange local communities?

Mining Weekly reports that Zambia Copper Investments (ZCI) has received the independent investment bank’s valuation of its 28,4% stake in Konkola Copper Mines (KCM): $213.15 million.

In a statement to shareholders, ZCI said that Vedanta Resources, the majority shareholder of KCM, now has a “reasonable period” within which to decide whether to exercise its right to buy out ZCI. See previous blog entries on this issue for discussion of what this all means and whether it is important to defend ZCI as is, to demand that it be sold on the Lusaka Stock Exchange, or anything else. I have been very confused about this issue, but some further clarity is starting to arrive.

In interviews with a colleague, senior sources from ZCI have suggested that the Copperbelt Development Foundation (a charitable foundation, itself a shareholder in ZCI) has done very little to promote the wellbeing of workers and communities on the Copperbelt since it was established as Anglo American pulled out of Zambia. It seems ZCI has been getting so few dividends from KCM that there has been no money to channel towards it. My colleague also reports however, that in the ZCI offices there are signs up for the CDF so it obviously exists in some sense. Questions about what it has achieved might be directed to the Zambian Government in Parliament before any decision is made, to the ZCI management, as well as to Anglo American and the aid donors that were involved in establishing CDF as a sweetener on the Anglo pull-out.

Potentially, the issue here is not whether ZCI should have done more to make the CDF operational, but whether Vedanta has any right to have paid so few dividends to shareholders, retaining 97% of earnings, supposedly for investment in the Konkola Deep project, when Vedanta's Development Agreement says that the majority of funding for KDMP should come from external sources. The promise of this massive investment was one reason Vedanta secured KCM so cheaply in the first place.