Vedanta announces KCM profit decline

Vedanta announces KCM profit decline
By Joan Chirwa
Saturday August 02, 2008 [04:00]

VEDANTA Resources Plc has announced a decline in profits at Konkola Copper Mines (KCM), attributing the slump to the new mining tax regime implemented by the Zambian government last April. Releasing the 2008 first quarter results, Vedanta Resources - which controls a 79.4 per cent stake in KCM - stated that the new mineral royalties being charged at three per cent from the previous 0.6 per cent, coupled with higher operating costs, led to the slump in profits.

First quarter earnings before interest, taxes, depreciation and amortisation declined to US$71.1 million about K248.9 billion compared with US$106.2 million around K371.7 billion gained in the corresponding period last year.

"The decrease in profitability was primarily due to higher costs and higher royalties," Vedanta Resources stated. "Operating costs remained under pressure due to higher manpower costs, higher energy prices and lower production."

Vedanta stated that mine output from the Zambian mines was around 21,000 tonnes, marginally higher than the corresponding period last year and significantly higher than the immediately preceding quarter last quarter of 2007.

"Improving mine output remains a major focus area for us. During the first quarter of 2008, KCM produced 36,000 tonnes of copper cathodes which was lower than the production in the corresponding period last year by about 3,000 tonnes," stated Vedanta.

"However, production volumes are higher than the immediately preceding quarter by about 2,000 tonnes. The production from the tailings leach plant was restricted to 9,000 metric tonnes, which is about 50 per cent of quarterly capacity on account of technical process issues which has now been stabilised."