Transcript KCM

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Laf1986

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Message Ven 31 Jan 2014 18:25

Transcript KCM

Seeking Alpha Transcript, I am only putting information that concern KCM

Menno Sanderse - Morgan Stanley

Yes good morning everybody. I have a couple, if I may, please. So let’s – the first one is with respect to KCM. It looks like you have started to stabilize the operations, but obviously, the original objective was to get us to 250,000 tonnes to 300,000 tonnes of integrated copper production versus the 135,000 tonnes you expect to do this year. Can you give us a bit more insight into, after you’ve looked at this in more detail now? How long you think it will take to get to that 250,000 tonnes to 300,000 tonnes, and at what cost level you think you can do that?

M.S. Mehta
Kishore would you like to take this?

Kishore Kumar
Yeah thank you. At this stage the entire focus has been on ramping up Konkola that you know it was completed. And as you said the mechanization process of bringing right challenges on the ground and we believe that this is not a job that will happen in just couple of quarters, it is a long journey. And we hope that this turnaround as we speak for Konkola in particular should be at least a year or two in terms of looking at stability of Konkola’s production going from the current levels of 4,000 tonnes to the higher levels. And on the side of Nchanga, obviously the low hanging fruit has been around the Tail Leach Plant and the customs smelting that has focused. And we believe that copper which has been stuck for almost now a more than a year, this year we’ll make an attempt to try and win that through operations. So overall, the journey from the current 130-140 levels of production, we see decline to be gradual and we expect to a rise of over 5% to 10% year on year in the short term.

Menno Sanderse - Morgan Stanley
Okay. Thank you. Secondly on the

Kishore Kumar
In terms of cost levels, sorry in terms of cost levels we firmly believe that we have been trying to hold at the level of $2.20 and the focus of the cost and cash flow continues to be less.

Roger Bell - JP Morgan
Yes good morning, gentlemen. Thanks very much for the call. I just wanted to touch on Copper-Zambia again. You mentioned that you’re moving towards more mechanized processes. Could you in light of that comment, give us a sense of where you expect total headcount to go over the next few years? And whether that has caused any further issues in negotiation with the local authorities etcetera? And then also, you mentioned briefly that you’ve been supporting KCM’s working capital requirements. Could you quantify how much cash Vedanta’s having to put into KCM as we stand today?

M.S. Mehta
Kishore would you take that question mechanization?

Kishore Kumar
Yeah. Sir we are taking mechanization at both the mines which is basically the Konkola mine as well as upper body of the Nchanga and mechanization involves capital equipment and larger phases in terms of mining. As we speak, the fees on any further equipment or any further manpower in addition to the company and all that we are saying with good mechanization scale of economies to come in and training and development, we need to look at the hard productivity over the existing manpower. In terms of our association with the government, we have maintained that there won’t be any layoffs which you have planned earlier and we are pleased to serve to any such at this point in time. And we continue to engage government in addressing the challenges on productivity. As regards the support that required in terms of the mechanization, we are at this point in time bringing technical experts both from Vedanta [ph] Group Companies which is based in Australia. And we are also looking at opportunities to bring in the right quality of asset and networking in mine in terms of mobility as well as managing to crack those operations. So that is as far as the mechanization of KCM goals. Now the second question that you requested was regarding the working capital challenge that we face, because of funds which were held back for reasons of documentation. We have received the support from Vedanta of funding of $65 million till date on the working capital.

Roger Bell - JP Morgan
Okay. Thank you very much. That’s very clear.

M.S. Mehta
Thank you, Roger.

Operator

Thank you. The next question is from the line of Anna Mulholland from Deutsche Bank. Please go ahead.

Anna Mulholland - Deutsche Bank
Sorry just back on KCM, I just wanted to see if you could give us a little bit of color about your cost control plans and successes there. Obviously, as we’ve gone through this calendar year, we’ve seen production guidance being downgraded from around 160 now to about 130. But you’re seeming comfortable that you can keep costs at around the 230 to the pound [ph] level. Can you just give us a little bit of color on how you’re managing to do that? And then just a very quick second question on financial number. You’re talking about a one-time charge on adoption of your fair value methodology of your stock option valuations in oil and gas. Can you just give us what that number was in terms of the impact on EBITDA, please? Thank you.

D.D. Jalan
On the KCM side the cash model was established as part of the organization turnaround effort and that included not only the management of cost, but also cash. So on the cost side, specifically to refer to the opportunity that exists on the ground number one, we have liberated the opportunities of buying and capital items on a synergy basis across Africa now with all our assets in Namibia, South Africa as well as KCM. There has been a significant support in terms of corporate capital whether it is looking at operation or buying sulfurous commodity for our sulfur both at Skorpion and at KCM. We see the opportunity of synergizing the buying has been of a significant support to the business. And as you’ll observe in addition to these supports and purchase, we also ended up shopping very expensive mining operations of [inaudible] where we incurred substantial costs in the previous prior period which has been stocked and we are looking at old mine operations and started to focus on the asset optimization within the open pits. So, overall it is the mix of commercial support from marketing in terms of the byproducts as well as the managing the asset optimization of the ground. So it has been a multi-pronged attack on managing the cost. The second question I guess was

Abhishek Shukla - Société Générale

Second question is on KCM. I know you are trying your best to sort out the operations. I was just wondering have you considered selling that operation to maybe somebody who will be more specialized in those kinds of mines. Any such thought ever crossed your mind? And also what would be your annual CapEx level at KCM over the next few years?

M.S. Mehta
Abhishek on the second question on KCM I don’t think we thought like that having of those assets, because we invested in this, we developed this asset over the last few years only the bark of the conviction that it’s a very high quality asset and can reap very good returns to shareholders. Yes it is true that it is lower than what we anticipated, but it’s not something that we can’t crack it. And as we mentioned as Kishore mentioned earlier he’s augmented the team of underground mining engineers and complete a complement of people. So that’s going to be turning point for him to start getting higher volume from the underground mining operations. As far as CapEx is concerned, there is no large projects which has been approved and right now under implementation at KCM. So there is no number to be mentioned which is worth significance. However, having said that, KCM’s historical CapEx has been above 150 million, 160 million, but it would be more efficient management of operations this number is likely to go down. Kishore would you like to take a guess hit on the number next year or late for the next year few months?

Kishore Kumar
It’s better I think just to add what you said these assets have got well invested over the last may be six or seven years. So at this point in time, we are bringing technical expertise going to recognize the mine and move to the typical modern mine. So that is going to be a support on the CapEx short term of Q3 to five years in terms of ramping up the production and we are expecting the CapEx levels around 125 to 115 levels.
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phili675

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Message Lun 3 Fév 2014 10:01

Re: Transcript KCM

Government’s alleged ignorance of KCM’s profits smells of corruption -Tayali

Time Posted: February 3, 2014 7:16 am
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KCM
The Zambian Voice has described as the best smell of corruption the alleged revelation that government was not aware of the announced huge profit Konkola Copper Mines (KCM) made in 2013.

The Zambian Voice is also of the view that such a revelation on KCM may also be a reflection on the whole mining industry.

Executive Director Chilufya Tayali has told Qfm news in an interview that this is because there is no way government could have not known such profits KCM made last year.

Mr. Tayali has alleged that such a revelation also implies that government has allegedly signed secret deals with the mines.

He observed that for government to allegedly pretend that it does not know about such profits the mines in the country are making is could be allegedly mean that it is keeping in mind the deal that it allegedly signed with the mines because it is well known fact that government has the capabilities and machinery to know such details.

The Zambian Voice Executive Director has suggested that in view of such alleged revelations that government is allegedly ignorant about the profits the country’s mines are making it is important that people in the country take charge of the running of the affairs of the country in order for it to move forward.

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phili675

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Message Lun 3 Fév 2014 10:04

Re: Transcript KCM

Government’s alleged ignorance on KCM’s profits surprising, they sit on the board – Magande

Time Posted: February 2, 2014 12:37 pm
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File:Former Minister of Finance & National Planning N’gandu Magande
Opposition National Movement for Progress (NMP) leader Ng’andu Magande has expressed surprise by government’s alleged ignorance on the huge profit that Konkola Copper Mines (KCM) attained in the year 2013 despite government officials sitting on the Mines board.

KCM is said to have made 230 million US Dollars profit last year.

Mr. Magande who is also former Finance Minister under the Levy Mwanawasa led Movement for Multiparty Democracy (MMD) government said that the Ministry of Finance and that of Mines are ideally supposed to know about such profits.

He said this because the Ministry of Finance is an investor in the Mine while the Ministry of Mines is the supervisor of the mining industry in the country.

Mr Magande said that it was not for people in the country to start relying on online media publications to have access to information such as profits that the country’s mines are making when government should be in the position to avail such information itself.

Last week, Foil Vedanta, a London based international solidarity group focusing on the activities of British mining company Vedanta, released a report in which they said that Vedanta made approximately $362 million, or 12.9% of their total group revenue, from KCM in 2013, according to the company itself and analyst reports.

The authors of the report , who visited Zambia in December, noted the number of misconceptions about this company in Zambia – where Vedanta has created the perception that they are an Indian company, and are making such a loss at KCM that they may need to be rescued by the state. In fact KCM are one of the highest profit making subsidiaries of the parent company.

The report detailed how Vedanta, a FTSE 250 London based company which is 67.99% owned by Chairman Anil Agarwal via tax havens, bought KCM for a fraction of its true value, possibly losing the Zambian exchequer up to $1.4bn in total. It goes on to record some of the environmental and social abuses of the company in Zambia – including pollution of the river Kafue in 2006 and 2010 which have led to ongoing health problems as extreme as deformed births and miscarriages in the Chingola area, as well as poor workers conditions and low pay. Vedanta’s tax contributions in Zambia are close to zero, and they even brag that 50% of tax paid is via employees Pay As You Earn (PAYE). Vedanta hide these truths in Zambia by paying former journalists as PR agents to keep their image clean.

where Vedanta has created the perception that they are an Indian company, and are making such a loss at KCM that they may need to be rescued by the state. In fact KCM are one of the highest profit making subsidiaries of the parent company.

The authors demonstrated that this style of operation is a pattern for Vedanta across India and elsewhere, where they are consistently opposed by people’s movements and under investigation by authorities for corruption and legal violations. In Chhattisgarh, India, they bought BALCO’s bauxite refinery, smelter and mines for $89 million in 2001 when it was worth around $800 million. Vedanta Chairman Anil Agarwal is currently under investigation by the Central Bureau of Investigations in India over the original disinvestment of 51% of Hindustan Zinc Ltd (HZL) to Vedanta for only $72 million, claiming the deal was considerably undervalued, and may have lost the exchequer hundreds of millions of dollars in revenue.

Vedanta’s subsidiary Sesa Goa are accused of exporting 150 million tonnes of iron ore from Goa, India in 2010/11 while only declaring 7.6 million, their agreed export allowance. The report suggests that Vedanta may also be exporting considerably more copper than they claim in Zambia, as well as cobalt and other minerals, and recommends citizens monitoring of trucks leaving their facilities to estimate the true amounts.

“We were shocked to discover how little information Zambian authorities and communities have about their own resource and the companies exploiting it .. This report aims to expose the real interests controlling Zambia’s copper industry – from banks and investment firms to foreign governments and NGOs.”

The report also looks at the real interests behind mining companies in Zambia. Using shareholder information it shows that secretive investment company Blackrock have high percentages of shares in Vedanta, Glencore and First Quantum, Zambia’s three biggest miners. Blackrock and JP Morgan are currently buying the majority of the worlds available copper to launch a futures market which will control the price of copper, giving them high returns on their investments while leaving copper producing nations in poverty. The report also draws attention to foreign governments such as Norway and the UK, who play a duplicitous game of funding transparency and accountability projects on mining via NGOs and the Zambian government, while also profiting from the abuses of the very same mining companies.

Author Samarendra Das says, “We were shocked to discover how little information Zambian authorities and communities have about their own resource and the companies exploiting it. Despite its role in the economy, copper is the elephant in the room in Zambia. This report aims to expose the real interests controlling Zambia’s copper industry – from banks and investment firms to foreign governments and NGOs.”

Co-author Miriam Rose states, “Mining companies are commonly called ‘investors’ in Zambia, but what they are doing is far from investment, it is short lived extraction and loot of resources, leaving behind only environmental and social damage which will be paid for by future generations. There is limited time left for Zambians to change the course of history, make links with peoples’ movements opposing these policies elsewhere, and truly profit from this resource before it is all gone.”

Retourner vers About Konkola KCM - Vedanta

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