Home >Companies >News >Zambia criticizes Vedanta for not generating enough jobs

New Delhi: The Zambian government has criticized Vedanta Resources Plc, the London-listed mining company controlled by Indian-born billionaire Anil Agarwal, for failing to generate employment commensurate with the size of its investment in the southern African country.

Vedanta made the single largest investment by a company in Zambia of $2.6 billion (around 14,144 crore today). It acquired a majority stake in Konkola Copper Mines Plc (KCM), an integrated copper producer, in 2004. Zambia is among the world’s leading exporters of copper. India’s imports from the country include non-ferrous metals such as copper and cobalt.

“Ideally, Vedanta wouldn’t really be worried about Zambian employment levels as it is not their issue," Zambian vice-president Guy Scott said in an interview on 19 March. “But we are pressurizing them to worry about exactly that. There is a concern that there is a disconnect between investment and employment."

The vice-president was in Delhi to attend the recently concluded Confederation of Indian Industry-Exim Bank Conclave on India-Africa Project Partnership in New Delhi.

Questions emailed to spokespersons for Vedanta Resources and KCM on Friday remained unanswered till press time on Wednesday.

To be sure, according to information available on KCM’S website, the company is Zambia’s largest private sector employer with around 22,000 permanent and contract employees, although Scott insisted that Vedanta hasn’t gone far enough in creating jobs.

In Zambia, the problem is of striking a balance between the development of the local population in terms of creating sufficient employment opportunities and promoting mining interests, Scott said.

“I mean Vedanta had it in India itself. You have been facing problems with the tribal areas. You have been facing problem with the environment," he said. “You know mining is intrinsically not automatically good for everybody. So, we have some issues there. On the other hand, we can’t not mine because that’s really what we are good at or what we have the resources to do."

Dipesh Dipu, a partner at Jenissi Management Consultants, a Hyderabad-based resources-focused consultancy, referred to the “resource curse", which suggests that mineral-rich countries and states don’t necessarily benefit to the extent that they expect to and mining-affected people continue to get marginalized.

“Localization of jobs and contracts have been targeted by policy interventions in most cases by the governments. Several mining companies too have begun to emphasize on social licence to operate and have strived to address the concerns of local population and regional economic development through employment and support to entrepreneurs," Dipu said.

“However, political outcry for resource nationalism in several geographies indicate that these measures have had limited success till now. Greater accountability and transparency in distribution of economic benefits are the key," he said.

Scott said the government wanted the mining company to farm out more work locally such as “secondary manufacturing steel poles, eucalyptus poles and maintenance and repair". Scott said Vedanta was not doing “enough of it".

Zambia’s demand comes in the backdrop of India seeking access to minerals in resource-rich Africa to fuel its growing economy.

India’s push for resources has pitted it against China, a contest in which it has usually been bested.

However, copper demand growth in India is expected to slow to about 6-7% this fiscal year from 8% on a compounded basis in the last 10 years, while prices of the metal are expected to be stable as a slowing world economy and China’s dulled appetite for metals has affected copper prices.

According to the Bank of Zambia, with a population of 13.11 million, the country has a real gross domestic product growth of 7.3%.

The country, with a per capita gross domestic product of $377 in 2012 and also has inflation running at the same pace—7.3%.

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