Zambia has warned mining companies against taking unilateral decisions to lay off workers on the pretext of seeking recourse to the delayed over US$600 million Value Added Tax refunds.
Government’s warning comes in the wake of Glencore owned Kabwe Sable zinc mine laying off 170 workers, of which 158 are unionised.
It claims it has found it difficult to continue operating the unit because of the withheld K64 million (US$11 million) by Zambia Revenue Authority.
The Kabwe based miner has since put the unit on care and maintenance pending a resolution to the impending resolve of the VAT refunds which management says has made it unsustainable and unable to remain operational.
Meanwhile, Mine Minister Christopher Yaluma says it was unfair for the miner to proceed with lay off of its workers when the Government had promised to refund the affected mining companies and other operators about US$630 million in VAT over exports of various commodities, warning that it will not accept arm twisting or being held ransom.
Kabwe’s sable Zinc Mine is the first company to take action and shut down operations over the controversial US$630 million Value Added Tax Refunds being contested by the mining and other exporters.
According to Mine Workers Union officials, Sable Zinc Mine has opted out of production and gone into care and maintenance.
Recently Mopani Copper Mines lamented the delayed refunds of over US$200 million in VAT with its chief executive Danny Callow expressing concern at the future of the more than 21,000 workers, contractors and suppliers that depend on it for survival.
He said the delayed resolution of the matter has affected most of the new projects with some suspended and sought a lasting solution to the matter, a voice which was echoed by the Zambia Chamber of Mines in its presentation to the lawmakers, Oct. 22.
And Zambia Chamber of Mines president Jackson Sikamo in his presentation to the expanded committee on estimates at Parliament lamented the Government’s unilateral review of the mineral royalties describing the unsustainable.
This is despite the mining sector having developed since privatization of various units in the late 2000 and generating about US$12 billion in various projects in the country which have raised copper output from a low 270,000 tons in 1970s to over 980,000 tons late this year.
Sikamo in his submissions to Parliament argued that Zambia’s plans to more than triple royalties for some mines are “entirely unsustainable” and will cause several operations in Africa’s second-largest copper producer to shut down, the chamber argued.
Mines are also owed n $630 million in value-added tax refunds for failing to provide import receipts from the countries where their copper ends up. The companies say this is nearly impossible as they mainly sell to middlemen.
However, Yaluma during a recent breakfast meeting with KPMG defended the Government’s action lamenting that despite the law in place, only two unnamed mining companies’ remitted taxes.
The decision would ensure all players comply and that Zambians needed to know how their mineral wealth was being used and sold and the real returns.
Recently, Southern African Development Community 15 member countries resolved in Zimbabwe to maximize on their natural and mineral wealth through industrialization.