(Bloomberg) — Zambia’s government filed notification of plans to take over Vedanta Resources Ltd.’s domestic copper assets, President Edgar Lungu said. The southern African nation’s Eurobond yields surged to a record high and the currency hit a 3 1/2-year low.
The move marks an escalation in tension between the government and mine owners, after Lungu last week threatened to “divorce” Vedanta and Glencore Plc, two of the biggest employers in Africa’s second-largest copper producer. Relations have been simmering after the state earlier this year increased royalties and unveiled a plan to overhaul the value-added tax system.
Lungu mainly targeted Konkola Copper Mines, Vedanta’s local unit, in a weekend visit to Zambia’s Copperbelt province, where some companies are cutting production and firing workers.
“There should be no question about our resolve to divorce, starting with KCM,” Lungu said in comments broadcast on state TV on Sunday. “We have filed that notification.”
The kwacha fell as much as 1.7% on Monday to 14.3152 against the dollar, the weakest level since November 2015, while yields on Zambia’s $1 billion of Eurobonds due 2024 rose by 19 basis points to 18.4%, the highest on record.
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