Bloomberg/Waldo Swiegers

Economy

Zambia files notification of plans to take over Vedanta assets

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The move marks an escalation in tension between the government and mine owners, after Lungu last week threatened to divorce Vedanta and Glencore, two of the biggest employers in Africa’s second-largest copper producer.

Monday 20, May 2019

(Bloomberg) --Zambian President Edgar Lungu said that the government has filed a notification of plans to take over Vedanta Resources’ domestic copper assets.

Relations between the government and mine owners have been simmering after the state earlier this year increased royalties and unveiled a plan to overhaul the value-added tax (VAT) system.

Lungu mainly targeted Vedanta’s local unit, Konkola Copper Mines (KCM), 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, we have filed that notification,” President Lungu said.

The Zambian government has for years accused mining companies of not paying enough tax. The state has struggled to settle on a taxation system for the industry, having made 10 changes in the past 16 years.

This year’s royalty increases have come as the government seeks cash to settle a surging foreign-debt bill. Servicing external loans has already caused Zambia’s foreign reserves to drop to a decade low, while its currency has fallen by more than 14 per cent against the dollar this year, making it the worst performer globally after Argentina’s peso.

Additionally, the Minister of Mines also said that Glencore must hand over to local contractors two copper shafts it plans to close.

 

TAGS : President Edgar Lungu, VAT, Konkola Copper Mines, Vedanta Resources, Glencore Mine

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