Flashback:
I BOUGHT KCM FOR $25MILLION BUT MAKE $500MILLION A YEAR SINCE 2003 – ANIL AGARWAL
KONKOLA Copper Mines owner Anil Agarwal has mocked the Zambian government over the paltry amount of money he paid to buy the mine, which is now giving him millions of dollars in profit.
And ActionAid Zambia economic justice project officer Patrick Nshindano says Agarwal’s mockery is very disheartening.
In a video released by activists from Foil Vedanta, Agarwal, who is Vedanta boss, boasted of raking in US500 million per year when he only bought the mine for US$25 million.
KCM is currently reported to be battling with operational challenges.
Agarwal mocked the Zambian government for giving him VVIP treatment when he came to acquire the asset and eventually becoming majority owner of KCM at the current 69 per cent.
Speaking to the Jain International Trade Organisation in Bangalore, India between March 22 – 23 this year, Agarwal told the cheering crowd how he bought KCM for a song, rather than the US$400 million asking price.
In the 3:58-minute video, a bragging Agarwal describes his surprise at receiving a VIP welcome to the Zambian Parliament, and ridicules the then Zambian president Levy Mwanawasa for claiming that Vedanta would improve the lives of Zambians, especially those in Chingola and Chililabombwe.
Agarwal reveals how he duped late president Mwanawasa on their first meeting that 30 members of his delegation missed the connecting flight out of Johannesburg into Lusaka, when in fact he had only travelled with one engineer from his firm.
Agarwal boasted that KCM was giving him US$500 million every year in profit, plus an extra US$1 billion.
In recent years, KCM has touted to dismiss close to 2,000 workers from its mining units to cut down on labour costs and improve its profitability.
Vedanta had continued to claim that they were making losses or a minimal profit at KCM.
The mining unit claims declining ore grades at its mining units and high operational costs on the backdrop of high labour and energy costs was hurting the country’s second-largest copper producer.
Below is the excerpt Agarwal gave in Hindi:
“Seven to eight years back, hunger remains to do big work. Pondering what to do…how can we let life go in vain? I saw it in the paper FT Financial Times. (Agarwal drinks bottled mineral water). There was largest copper mine in Africa. That copper mine was up for sale. That government was privatising it. I got quite interested in it. I asked few people; they replied, ‘Aren’t you ashamed?’ ‘What ridiculousness you are talking off?’ I told them ‘Where is the problem in talking?’
‘Speak to them let us see…’ Then he saw it, it was a big deal. I have a friend in McKensey – Ranjit Pandit. I went to him, asked him to make papers. ‘Make the papers beautiful, professional.’ Papers were prepared. We kept it at US$400 million. In pocket we do not have US$4 million!… bid for US$400 million! US$25 million … US$25 million that we had, ha ha ha… Take chance in life definitely! All people sitting there… Take chance! If you won’t take chance, nothing will happen (Clapping, Whistling…)
Why we are different – different because we take chances. I told you we have to take chance. Then we said ‘US$25 million we will give you cash and US$375 million we have to invest in making the machines running’. We forgot the matter, and suddenly in about a month or so, we received calls; they invited us. We called up and inquired.
They confirmed: ‘This company is yours’… ‘Really?’ I took one of our engineers and went to Johannesburg and further changing flight there to Lusaka.
When we arrived there, we were surprised to receive VVIP treatment there, red carpet, entire government machinery has arrived at airport to receive us. Surprised seeing such arrangement, we asked someone. ‘It’s all for you sir’. ‘How many people you have in the delegation team?’ Ministers, VVIP vehicles, cavalcade…’
We were told ‘You will be going to the Parliament today; and President’s place as well… Where are your people? It’s necessary to meet the President.’ Repeatedly, we were asked ‘Where is your delegation?’ I asked ‘What delegation? We are the delegation only’.
We were taken to the President. The President… ‘Your Excellency, we are 30 people in our delegation. But they missed the flight at Johannesburg.’ (Audience laughs). ‘Can you wait till tomorrow? They all will come’. ‘No no no. The Parliament is tomorrow, we have to decide today. Key is ready. Are you ready?’ ‘I am ready, I am always ready. I will handle it’. (Laughing).
And they came, what a Parliament House! First time I saw… I had held a bead necklace (in the name of God RAM) and kept chanting, moving ahead. With my smiling face. When I sat there with my man, the President came and sat by our side.
He told the entire Parliament that what great people we are, and our empire and that ‘they (KCM) will make our lives gorgeous. And they will make schools, make hospitals and blah-blah… We just kept watching, chanting God’s name there. All you make, what we make! Ah ha ha ha ha ha ha.
We took over the company. It’s been 9 years, and since then, every year it is giving us a minimum of US$500 million plus US$1 billion every year… it has been continuously giving back. It’s a matter of taking a chance. I will keep telling you stories. We had oil company. They told us no one else can buy oil company…”
Agarwal’s ‘motivational talk’ has angered Foil Vedanta, which had previously released figures from Vedanta’s annual reports showing that the company made US$362 million in 2013.
Vedanta chief executive officer Tom Albanese disputed this during his visits to Zambia last February, repeating the previous claim that KCM was making a very low profit or a loss due to high operational costs and higher taxes.
But Nshindano, from ActionAid Zambia, said the statement from Agarwal was disheartening.
“It is saddening even that an investor can brag that he was given red-carpet treatment without taking into consideration what kind of importance that project has for the people of Zambia,” he said.
Nshindano urged the government to move in to ensure Vedanta accounts for its operations.
“Definitely, the government needs to move in and ensure that the right corrective measures are taken to see to it that Zambians benefit from the mine,” he said.
He also said the Zambian officials that negotiated the sale of KCM owed Zambians an explanation on why a company worth billions was sold to Vedanta Resources for peanuts.
“We sold this asset in a hurry but we now needed to ensure that it benefits us,” Nshindano added.
The London Stock Exchange-listed Vedanta made a profit of US$26 million from KCM for the three-month period October to December 2004, effectively recovering the purchase price in just three months.
A few weeks ago, a protest at the Zambian High Commission in London called on Vedanta and the Zambian government to release KCM’s annual reports, containing the official figures on profits and tax payment, which are currently kept secret.
They also suggested that Vedanta should be forced to pay the fine of US$2 million served by Zambian courts in 2011 as compensation to 2,000 claimants poisoned by major pollution of the Kafue River in 2006, and stop ongoing spills affecting Chingola residents.
In addition, they joined the calls of KCM employees and former employees in Zambia, who are demanding that retrenched workers be properly compensated.
The government came under heavy attack from prominent citizens, the mining area’s chamber of commerce and the Zambia Congress of Trade Unions (ZCTU) for allowing the mine to be sold for peanuts.
Stakeholders questioned the deal and the competence of the negotiating team.
I BOUGHT KCM FOR $25MILLION BUT MAKE $500MILLION A YEAR SINCE 2003 – ANIL AGARWAL
