Message Mar 10 Fév 2015 20:55

Vedanta hit by Zambia mining tax concerns

Vedanta shares are either worth £10 or 10p, according to its own house broker.


Fears that Zambia may defer, rather than cut, mining royalty payments in a tax dispute helped drag Vedanta 6.1 per cent lower to 431.8p on Tuesday. Zambia last month raised mining taxes, which led Vedanta to say it was reviewing its copper operations in the country.


Morgan Stanley said that if Zambia does not water down its tax regime, Vedanta’s Konkola Copper Mines unit would be worthless. Such regulatory risks add to the difficulty of putting a price on Vedanta shares, it said.
While Vedanta appears to have no immediate refinancing risk, worries about its debt levels are exacerbated by a group structure that complicates cash transfers, Morgan Stanley said. If commodity prices stay low and the market loses faith in Vedanta’s ability to refinance debt, “we see 100 per cent downside to Vedanta’s equity”.