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Vedanta rejects Viceroy's claim its Namibia zinc assets are worthless

Vedanta Ltd's Zinc International unit is holding 'worthless' overseas assets whose loans are secured against the company's stake in Hindustan Zinc Ltd, according to a report by Viceroy Research Group, which warned that liabilities from its idled Skorpion zinc complex in Namibia remain unaccounted for. The Skorpion mine and smelter, once touted as a key pillar of Vedanta's African operations, has been shut since a wall collapse in 2020 and is now 'a scrapheap' with no industrial power, missing equipment, and no sign of restart activity, the short-seller said on Monday. Despite being carried on Vedanta's books at about $70 million, the site is 'functionally beyond economic recovery' and must undergo rehabilitation, for which no adequate provision has been made, Viceroy said. 'While the Skorpion complex itself is held on-book at a nominal $70 million valuation, it supports a $1 billion valuation of Skorpion's sister mine – Black Mountain/Gamsberg,' it said. Rejecting the allegations, a Vedanta spokesperson said the Skorpion zinc mine was acquired by the company in 2010, when the remaining life of mine was estimated at just four years. 'Through sustained investment, rigorous exploration, and advanced geological analysis, Vedanta successfully operated the mine for a full decade, until 2020. In that year, the mine was placed under care and maintenance. This strategic pause was implemented to chart a sustainable path forward. Skorpion is currently undergoing a structured and technically supported evaluation and exploration aimed at restart. Multiple bankable feasibility studies have been completed for various projects. Skorpion Zinc remains one of Africa's most significant and strategic zinc assets, and the company is fully committed to the project,' the spokesperson said. According to Viceroy, Zinc International's debts are cross-guaranteed with other Vedanta assets, and financing for the African operations is secured against the group's shares in Hindustan Zinc. That potentially exposes Vedanta's crown jewel in India to lenders if the overseas operations default, it warned. Vedanta has allocated just $16 million for Skorpion's cleanup — far short of the hundreds of millions of dollars typically needed for such mine closures — and is likely to place the asset into liquidation once inventories are sold, Viceroy alleged. The mine's environmental liabilities, including lead contamination in the nearby town of Rosh Pinah, remain unresolved. The report also cast doubt on Vedanta's plans to retrofit the Skorpion smelter to process ore from its Black Mountain mine in South Africa, saying the conversion would require a full rebuild, new power arrangements, and road infrastructure that does not exist. 'Viceroy's visit to Skorpion enforces our belief that the asset is completely worthless. Management's plans to re-start the mine and convert the smelter are pure fiction,' it said.