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UPDATE 2-Vedanta seeks int'l arbitration to settle Zambia dispute

Sudarshan Varadhan and Muvija M

(Adds details from statement)

BENGALURU/NEW DELHI, May 31 (Reuters) - Global mining conglomerate Vedanta Resources said on Friday it was seeking international arbitration over Zambia's appointment of a provisional liquidator to run the company's Konkola Copper Mines (KCM) business.

Vedanta said on Friday its executives were unable to visit its KCM operation and engage with local management, in a setback to efforts to ease tensions amid a legal battle with Africa's second-biggest copper producer.

The Zambian government has accused KCM of breaching its operating license. Legal proceedings have been adjourned until June 4.

Shares of Vedanta's India-listed arm Vedanta Ltd ended 2.1% lower on Friday.

The tussle is the latest legal challenge confronting Vedanta, which has been facing opposition from authorities and locals over alleged violations across continents - from Thoothukudi, located near India's southern tip, to Chingola in Zambia's copper belt.

Police shot dead 12 anti-Vedanta demonstrators protesting alleged pollution in the southern state of Tamil Nadu in May 2018. Less than a year later, a protester and a policeman died in clashes in March over inadequate jobs to locals in Vedanta's alumina refinery in the eastern Indian state of Odisha.

Vedanta denies any allegation of malpractice.

Demonstrators marched in Chingola earlier this month to welcome the state's efforts to bring in another investor.

Many natural resource-rich African countries are trying to secure greater benefits from natural resources being managed by foreign companies.

Vedanta Resources' Chairman Anil Agarwal said on Thursday the company was working to comply with Zambia's laws and tax requirements.

The miner, which says it had been reassured by the government that it has not entered into any sale agreements with other parties, said it had notified ZCCM-IH, the Zambian minority shareholder in KCM, of a dispute on Thursday.

The shareholders' agreement provides for disputes to be submitted to international arbitration in Johannesburg, Vedanta said.

Zambia said on Thursday its decision to punish Vedanta's local operation for what it said were breaches of environmental and financial regulations was a signal to other firms to follow the country's laws.

The country has riled miners with tax changes they say will force them to withhold the investment Zambia needs.

KCM, one of Zambia's largest employers, said it would raise output to 400,000 tonnes per year, but instead production has fallen because of technical issues as infrastructure has aged, as well as problems such as power outages.

(Additional reporting by Chris Mfula in LUSAKA; Editing by Kenneth Maxwell and David Evans)