Terms Announcement

ZCCM Invs.Hldgs PLC
20 August 2004


                       --------------------
                         (ZCCM-IH logo)
                    ZCCM Investments Holdings plc
               Incorporated in the Republic of Zambia
                      (Registered number 771)
                        Share code: ZCCM-IH
                         ISIN:ZM0000000037
                            ('ZCCM-IH')
                        --------------------



TERMS ANNOUNCEMENT IN RESPECT OF THE INTRODUCTION OF A STRATEGIC EQUITY PARTNER
        FOR KONKOLA COPPER MINES PLC AND FURTHER CAUTIONARY ANNOUNCEMENT



1.                  Introduction


Further to the cautionary announcements published over the period 16 May 2003 to
23 April 2004, the board of ZCCM-IH is pleased to announce that ZCCM-IH, the
Government of the Republic of Zambia ('GRZ'), Zambia Copper Investments Limited
('ZCI'), Konkola Copper Mines plc ('KCM') and Vedanta Resources plc ('Vedanta')
(collectively, 'the Parties') have reached agreement on the terms of an
investment by Vedanta into KCM ('the Vedanta investment'), subject to the
fulfilment of certain conditions precedent set out in paragraph 7 below
('conditions precedent').


2.                  Background and rationale for the Vedanta investment


Concomitant with the exit of Anglo American plc from ZCI (and indirectly KCM) in
September 2002, the KCM shareholders with the support of GRZ embarked on a
process to ensure the long-term sustainability of KCM.  It was agreed that the
introduction of a new strategic equity partner was the most appropriate route to
follow to secure the future of KCM and to address two key issues, namely the:

• provision of technical expertise and management experience; and

• funding support and financial stability for KCM.


A bid process was initiated, therefore, in October 2002 and bids were received
in February 2003.  After due consideration of the bids received, Vedanta was
selected as the preferred bidder by the KCM board and endorsed by GRZ as its bid
represented the most attractive offer for KCM from a value perspective.


Vedanta is a London listed diversified metals and mining group with zinc, copper
and aluminium operations in India and two copper mines in Australia.  Vedanta
listed on the London Stock Exchange plc in November 2003 and has a current
market capitalisation of approximately US$1.4 billion.  Vedanta holds its
interests in its operations through two subsidiaries, Sterlite Industries
(India) Limited ('Sterlite') and the Madras Aluminium Company Limited.  Sterlite
is Vedanta's principal subsidiary company and is currently listed on the Bombay
Stock Exchange.  Vedanta's copper operations are owned and operated by Sterlite,
which also holds majority stakes in the group's zinc business, Hindustan Zinc
Limited, and the group's principal aluminium business, the Bharat Aluminium
Company Limited.  Vedanta has recently embarked on a major capital expenditure
programme of approximately US$2 billion to significantly expand its operations.


3.       Terms of the Vedanta investment and associated arrangements


The Vedanta investment is dependent upon the fulfilment of the conditions
precedent as stated in paragraph 7 below.  The key terms of the Vedanta
investment that the Parties have agreed to are as follows:

• the subscription by Vedanta for sufficient new KCM ordinary shares for
an amount of US$25 million such that Vedanta obtains a 51% interest in KCM.
Accordingly, ZCCM-IH will reduce its interest in KCM from 42% to 20.6% and ZCI
will reduce its interest in KCM from 58% to 28.4%;

• the new KCM ordinary shares will be provisionally allocated to ZCCM-IH
and ZCI pro rata to their existing shareholdings and each company will
subsequently renounce its provisional allocation in favour of Vedanta.  As
consideration for its renouncement, ZCI will receive a deferred consideration of
US$23.2 million from Vedanta, payable over a period commencing on the completion
date of the Vedanta investment and ending on 31 December 2008.  Similarly, while
ZCCM-IH will not receive any deferred consideration from Vedanta, in order for
ZCCM-IH to be in an equivalent position, ZCCM-IH will receive US$16.8 million by
way of a debt cancellation arrangement with GRZ, whereby GRZ will cancel debt
owed by ZCCM-IH to GRZ;

• in the event that the free cash flow, after sustaining and project
capital expenditures, of KCM is negative at any time during a period of nine
years after the completion date of the Vedanta investment, Vedanta will
guarantee and be responsible for providing or securing the necessary funding
required by KCM to immediately fund to the extent of the negative cash flow up
to but not exceeding a cumulative amount of US$220 million ('standby funding
commitment').  Should this standby funding commitment be provided by Vedanta in
the form of equity, it will be non-dilutive to existing shareholders;

• Vedanta will contractually undertake not to exit KCM prior to
1 January 2008.  Thereafter if it wishes to exit, Vedanta will be required to
provide a twelve months' notice of its intention to exit, during which time
Vedanta will continue to provide the management to KCM, and Vedanta will be
obliged to pay the budgeted capital expenditure for the notice period (as
adjusted for any over or under spending of capital expenditure in prior
financial periods), with its standby funding commitment terminating on the exit
date;

• Vedanta has agreed that KCM will set aside a portion of its future
annual free cash flow to create a cash reserve so that the shareholders and GRZ
have assurance that as cash is accumulated in the reserve, KCM has dedicated
funds available to fund its environmental and terminal benefits obligations;

• an undertaking by Vedanta to have KCM complete a feasibility study on
the Konkola ore body by no later than 31 December 2006, including a US$1 million
contribution by Vedanta towards the cost of the study;

• should the KCM board determine to proceed with further development of
the Konkola ore body, Vedanta will be responsible for securing the necessary
funding, whether it be in the form of equity, debt or a combination thereof;

• Vedanta will have a call option over ZCI shares in KCM, exercisable on
either a decision to further develop the Konkola ore body or the achievement by
Konkola mine, a division of KCM, of three million tonnes per annum of ore
production for four consecutive quarters.  The exercise price will be the
prevailing fair market value;

• ZCCM-IH and ZCI will have a call option over Vedanta's shares in KCM,
exercisable on or after 31 December 2009 should the KCM board decide not to
proceed with the further development of the Konkola ore body. The exercise price
will be the prevailing fair market value of such shares.  However, if Vedanta
can demonstrate, at any time before the exercise date of the call option, that
an additional five years production for the period from 2013 to 2017, at 175 000
tonnes per annum of produced finished copper utilising the existing KCM mining
licence and adjacent areas is achievable, then in those circumstances the
exercise date of the call option will be deferred for a period of five years,
such that it may not be exercised prior to 31 December 2014; and

• GRZ will continue to own one special share in KCM, which will allow GRZ
to vote at KCM shareholder meetings under certain circumstances as specified in
the new KCM articles of association, which will become effective on completion.
For example, the consent of GRZ shall be required for any material change in the
nature of the business of KCM.


The resulting ownership structure subsequent to the Vedanta investment will be
as follows:

•         Vedanta 51%;
•         ZCCM-IH 20.6%;
•         ZCI 28.4%: and
•         GRZ Special Share.


On the basis of Vedanta becoming the new controlling shareholder of KCM, GRZ has
also agreed the terms of a new development agreement with KCM, which regulates
the legal and fiscal framework under which KCM operates in Zambia.  In addition
to providing legislative certainty to KCM for the agreed stability period, the
development agreement also has certain incentives which will benefit KCM if the
KCM board decides to proceed with the further development of the Konkola ore
body.


At present, the board of KCM consists of three ZCI appointed directors, two
ZCCM-IH appointed directors and one GRZ appointed director (with limited voting
rights).  On completion of the Vedanta investment, the board of KCM will be
reconstituted and consist of five Vedanta appointed directors, two ZCI appointed
directors, two ZCCM-IH appointed directors and one GRZ appointed director (with
limited voting rights).


In assessing the value proposition of the Vedanta investment to ZCCM-IH
shareholders, the board of ZCCM-IH is of the view that the above terms need to
be considered and understood in the right context.  The Vedanta investment to
obtain a 51% interest in KCM is a subscription for new KCM ordinary shares,
rather than an acquisition of existing shares by Vedanta.  Thus for existing KCM
shareholders to receive fair value, the value proposition of the Vedanta
investment needs to approximate the value of KCM.  Thus while the US$25 million
subscription is a payment to KCM, the US$40 million value attributable directly
to shareholders is equivalent to them receiving 49% of US$82 million payable
directly to KCM.  Furthermore, the board of ZCCM-IH has attached considerable
value to the US$220 million standby funding commitment to KCM, which provides
the necessary financial support to KCM in times of need.  The proposed cash
provisioning by KCM for environmental and terminal benefits obligations also
provides the directors of ZCCM-IH with comfort that KCM has dedicated funds
available to fund these obligations as they fall due.  Thus the board of ZCCM-IH
is of the view that the Vedanta investment is fair value and in the best
interests of ZCCM-IH shareholders, who will continue to benefit from ZCCM-IH's
20.6% retained interest in KCM, and thus share in the future development of
KCM's assets.


4.                  Warranties


ZCCM-IH, ZCI and KCM have provided certain warranties to Vedanta of a type
normal in a transaction of this nature.


5.                  Waiver of mandatory offer


The Vedanta investment will result in Vedanta acquiring control of KCM and hence
pursuant to Rule 56 of the Zambian Securities (Take-overs and Mergers) Rules,
1993, Vedanta is required to make a mandatory offer to the existing shareholders
of KCM (namely ZCI and ZCCM-IH).  An application will be submitted to the
Securities and Exchange Commission of Zambia ('SEC') by Vedanta to waive the
requirement that a mandatory offer be made by Vedanta to ZCI and ZCCM-IH.



6.                  Pro forma financial effects


The table below sets out the financial effects of the Vedanta investment on the
loss per share and net asset value per share for a ZCCM-IH shareholder based
upon the unaudited quarterly financial results of ZCCM-IH for the three months
ended 31 March 2004:

   --------------------- -------------           ------------            -------
                         Before the Vedanta      After the Vedanta
                         investment1             investment2
                         (Kwacha)                (Kwacha)               Change
                                                                        (%)
   ---------------------           -------------           ------------ -------
(Loss) / earnings per                   (351.9)                 539.3    253.2
share
Net asset value per      (17 540.2)              (16 649.0)                5.1
share
Number of shares in      89 296 423              89 296 423                  -
issue
Weighted average number  89 296 423              89 296 423                  -
of shares                -------------           ------------            -------
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Notes:

1.       The amounts in the 'Before the Vedanta investment' column are based
upon the unaudited quarterly financial results of ZCCM-IH for the three months
ended 31 March 2004.

2.       the amounts in the 'After the Vedanta investment' column have been
calculated as follows:

• the loss per share is based on the assumption that the Vedanta
investment was effective on 1 January 2004;

• the investment in KCM is classified as an associate by ZCCM-IH,
however income from KCM is not equity accounted but rather accounted for on a
dividend received basis.  As ZCCM-IH did not receive any dividends from KCM
during the three months ended 31 March 2004, the only income statement effect is
therefore the recognition of the reduction in debt of US$16.8 million; and

• the net asset value per share is based on the assumption that the
Vedanta investment was effective on 31 March 2004 and hence the terms of the
Vedanta investment, as set out in paragraph 3 above and applicable to the
ZCCM-IH balance sheet, have been used to adjust the ZCCM-IH balance sheet at
31 March 2004.

3.       The exchange rate used for the conversion of US Dollar denominated
balances into Kwacha is the official closing exchange rate at 31 March 2004,
being US$1.00 = Kwacha4 737.


7.                  Conditions precedent


The Vedanta investment is conditional upon the fulfilment of, inter alia, the
following conditions precedent:

• the requisite approval of the shareholders of ZCI to the Vedanta
investment;

• approvals by the JSE Securities Exchange South Africa, Paris Bourse
and the South African Reserve Bank of the required circular to ZCI shareholders;

• a waiver by the SEC of the requirement that Vedanta make an offer to
ZCCM-IH and ZCI for their shares in KCM and the consent thereto by ZCI and
ZCCM-IH;

• the consent of certain KCM debt providers to the Vedanta investment;

• the signature of a management agreement for the provision of certain
services by Vedanta to KCM; and

• upon satisfaction of the above conditions precedent, the execution of
a new shareholders agreement governing the relationship between the Parties, the
execution of the new development agreement between KCM and GRZ, the execution of
the call option agreements between Vedanta, ZCI and ZCCM-IH and the adoption by
KCM of new articles of association.


8.                  Documentation and further cautionary announcement

Given the nature of the Vedanta investment, ZCCM-IH shareholder approval is not
required for the successful  implementation of the Vedanta investment and a
circular to ZCCM-IH shareholders is not required to be posted in terms of the
Listings Requirements of the Lusaka Stock Exchange.


ZCCM-IH shareholders are advised to continue to exercise caution when dealing in
the securities of ZCCM-IH, until such time as a further announcement is made as
to the fulfilment of the conditions precedent and hence completion of the
Vedanta investment.

By order of the board

Financial Advisor to ZCCM-IH and GRZ              Sponsoring Broker to ZCCM-IH
Standard Bank London Limited is a firm            Cavmont Stockbrokers Limited
authorised and regulated by the Financial
Services Authority in the United Kingdom
(Registration number 2130447)                     A member of the Lusaka Stock
                                                  Exchange
                                                  Regulated in Zambia by the
                                                  Securities and Exchange
                                                  Commission of Zambia
                                                  (Registration number 52224)



  Issued at Lusaka, Zambia by Cavmont Stockbrokers Limited on 20 August 2004.






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