Interview - Vedanta stands by struggling Zambian copper mine

By Ed Stoddard and Silvia Antonioli

JOHANNESBURG/LONDON (Reuters) - London-listed Vedanta Resources Plc remains committed to its underperforming Zambian copper unit, despite disputes with the government over lay-offs and a looming audit of its books, the company's chief executive said on Friday.

Vedanta bought a controlling stake in Konkola Copper Mines (KCM) a decade ago, but the business, intended to be part of the company's push beyond India, has repeatedly disappointed.

In the financial year ended March 31, production of mined metal in Zambia fell 19 percent to 128,000 tonnes due to the temporary suspension of some mines.

Chief Executive Tom Albanese, the former Rio Tinto Plc boss appointed in April with a brief to get the best out of Vedanta's underperforming mines, told Reuters in a telephone interview that Vedanta was keen to keep copper in its portfolio.

"It is very rare to see a resource of the size or quality of the Zambian Copperbelt. And so it is quite important for us to invest in improving the business and with doing so I see a 50-year vision for KCM," he said.

"We continue to invest in our Zambian businesses. We are struggling right now with the business but I am hoping it will improve its performance and then we will be considering further capital investments," he said, though he declined to give a figure for planned capital expenditure in Zambia this year.

KCM is also subject to an industry-wide tax probe.

"What we have seen in the past few weeks in Zambia is the government calling for a forensic audit of the accounts of KCM and more recently an audit of all the mines in the copper belt," Albanese said.

"When the audit comes forth we look forward to cooperating with the government, we are completely transparent," he said.

Successive Zambian governments have complained that they fell mining companies are not paying their fair share of taxes.

In Goa in India, where a mining ban was recently lifted, he said he expected the company's Sesa Sterlite iron ore unit to resume production around October after the monsoon season.

He said production would be around 50 to 60 percent of what it was before the ban, when the company had a capacity to produce about 14.5 million tonnes of ore annually.

India's Supreme Court lifted a 19-month old ban on mining in Goa in April, although it capped annual output in the state at 20 million tonnes.

The ban was imposed in 2012 as part of a drive to curb illegal mining.

(Additional reporting by Karen Rebelo in Bangalore; Editing by David Holmes)