Chingola, Zambia — 06 March 2013 – Konkola Copper Mines plc “’ the Zambian arm of Vedanta Resources plc “’ will probably resume production at a pit that halted its operations in December after a mining contract was not renewed.
“Most likely, we should be looking at the next three months or so, for production to resume,”, Konkola Copper Mines spokesman Joy Sata told Bloomberg News by mobile phone from Zambia’s northern Copperbelt province. “We are already mobilising equipment.”
The closure of the 4km pit is costing the company US$1.5 million daily, according to a February 15 London High Court judgment, which amounted to US$90 million by March 1. The mine accounts for a “substantial percentage” of gross domestic product in Africa’s biggest copper producer, according to the document.
Konkola Copper Mines, or KCM as it is known, didn’t renew U&M Mining Zambia Limited’s mining contract at the Chingola F&D open pit, which expired on December 31, the company said.
It ended another contract to mine waste at the operation January 28, saying U&M had failed to meet production targets for five straight months. The contract miner, owned by Brazil’s U&M Mineracao e Construcao S/A, denied any breach, according to the judgment.
KCM obtained a court order in Zambia on January 31, compelling U&M to immediately vacate the mine, and hand over equipment worth about US$12 million to the Vedanta unit. The court set the return date for January 31, and later postponed it to March 5, according to the London judgment.
Under their contract agreement, the companies will take their dispute to the London Court of International Arbitration, but no starting date has been given for the mediation.
Conditions at the mine are reported to be tense. Tense. All work at the mine has stopped, and U&M has begun to lay off workers.
Source: Bloomberg News. For more information, click here.