More Uncertainty For KCM As CEC Cuts Power Supply

The Copperbelt Energy Corporation (CEC) will discontinue the supply of power to Konkola Copper Mines (KCM) as of today.

This follows the expiration of a 20-year power supply agreement (PSA) between the two, which originally ended in March 2020 but was extended up until May 31. 

Without an agreement CEC is unable to continue supplying the mine. However, according to a media statement dated May 29 CEC has indicated that it will provide the minimum power required to safeguard personnel and the mine’s assets.

According to CEC, KCM has an outstanding debt of US$132 million, which is expected to rise to US$144 million. Negotiations to agree a new contract have failed to date.

In response General Manager for corporate affairs at KCM Shapi Shachinda has revealed that KCM has entered into a binding Term Sheet Agreement for a new PSA between Zesco Ltd and KCM, effective 1st June 2020.

“Zesco Ltd is expected to conclude a Wheeling Agreement soonest with CEC to transmit power from Zesco Ltd, via CEC infrastructure, to KCM operations,” Shachinda stated.

“We expect a seamless transition in the supply of power from CEC to Zesco and any interference or restriction will be an act of sabotage. Konkola Copper Mines cannot comment any further on any other issues pertaining to this matter as there is a pending case at the Kitwe High Court to which the court is yet to pronounce itself on the said matters. In as far as these matters are concerned, KCM reserves its rights and will seek redress at an appropriate time and forum,” Shachinda continued.

Last year, the Zambian government applied to liquidate KCM because of the firm’s alleged environmental and financial regulation breaches. While a ruling in the South African High Court granted Vedanta an urgent interim interdict to stop the Zambian government from forcing through a liquidation of KCM, Zambian officials have denied the enforceability of the foreign ruling.

Government is expected to announce a permanent solution to the liquidation process at KCM shortly. Minister of Mines Richard Musukwa has indicated that the Government does not want to prolong the process but is looking to guarantee operations and secure jobs.