US-based short-seller Viceroy Research LLP has issued a scathing report on Vedanta Resources Ltd’s (VRL) valuation of its Zambian subsidiary Konkola Copper Mines (KCM), describing the asset as distressed, loss-making and vastly overstated.
According to Viceroy, Vedanta’s US$2.2bn (billion) valuation of KCM is based on “scavenged dumps, hidden liabilities and promises it cannot fund.” The report, which draws on-site inspections, drone surveys, satellite imagery and interviews with workers, says KCM is operating far below capacity, with mines flooded, smelters gutted and production propped up largely by reprocessing waste dumps instead of active mining.
KCM, which was seized by the Zambian government in 2019 over repeated failures by Vedanta to invest, was only returned in July 2024 under legal pressure and a renewed pledge of US$1.4bn in new capital.
Viceroy argues that this commitment is 'hollow', claiming that almost no meaningful investment has been made since the handover. Instead, it says copper production has collapsed by more than 75%since 2018, falling to just 45,000 tonnes in FY24-25 compared to 195,300 tonnes seven years earlier.
The report highlighted severe operational problems across KCM’s facilities. The Konkola mine at Chililabombwe, long considered the company’s prize asset, is crippled by extreme water inflows and consumes most of its power just to keep pumps running, leaving little energy for production. The Nchanga refinery and smelter at Chingola is operating at less than 10% of its design capacity, with large sections dismantled or idle, while the Nkana refinery near Kitwe appears to be producing at only 15% of its capacity.
Financial data disclosed in Vedanta’s FY24-25 results show KCM posted an operating loss of US$196mn (million) and negative EBITDA (earnings before interest, taxes, depreciation and amortisation) of US$38mn, while spending just US$12mn on sustaining capital expenditure (capex). Viceroy says such figures confirm KCM is “burning cash rather than generating it,” with no evidence of new projects or investment on the ground.
The report also questioned Vedanta’s accounting treatment of KCM, noting that while VRL records the mine’s property, plant and equipment at US$2.7bn, KCM’s liquidator had valued the same assets at only US$1.1bn less than a year earlier.
Viceroy warned of 'hidden liabilities' amounting to over US$1.2bn, which could reappear on KCM’s books if it ever generates cash flow, leaving creditors ahead of Vedanta in repayment priority.
Beyond KCM’s operational decline, Viceroy raised concerns about Vedanta’s ability to fund any turnaround, citing the group’s US$13bn debt burden with borrowing costs above 15%. “Vedanta’s US$1.2bn expansion commitment would not even restore KCM to 2018 levels of production,” the report stated. “Bondholders lose in both scenarios: either through unsustainable new debt or through collapse of asset value when Zambia intervenes again.”
Interviews conducted by Viceroy in Zambia painted a bleak picture on the ground. It says local workers described shortages of spares, stripped infrastructure, unpaid suppliers and a lack of genuine reinvestment, while community members in Chingola and Kitwe expressed frustration that jobs had not returned despite public announcements of fresh investment. A former KCM mechanical fitter told researchers that some departments remain shut for want of spare parts, while others warned that Vedanta is 'just processing tailings' instead of carrying out real mining.
According to the short-seller, political risks remain high, with Zambia having already seized KCM once and unrest simmering in the country’s Copperbelt towns. Viceroy suggested the possibility of another intervention if Vedanta fails to meet its promises.
The report concluded that KCM is a 'stranded asset', overstated on Vedanta’s balance sheet, burdened by concealed debt, and incapable of delivering the growth or cash-flows required to support the group’s refinancing needs.
Viceroy says it would release a follow-up report focusing on Vedanta’s environmental and social record at KCM, citing concerns about heavy dewatering and its impact on Zambia’s rivers and wetlands.
Neither HZL nor Vedanta issued a statement in response to the allegations at the time of publication.
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