Lumwana mine

Suppliers warn mines against using new tax regime as excuse to delay payments

MINE suppliers and contractors have warned mining companies against using the new tax regime to penalise them.

Mines Suppliers and Contractors’ Association president, Augustine Mubanga, said the new tax regime should not be used as an excuse to delay payment as well as discard local suppliers and contractors.

The Chamber of Mines has warned that the new tax regime, which has raised royalties from six per cent to 20 per cent on open cast mine and eight per cent on underground mines, will severely hurt mining companies.

Already contending with a plunge in copper prices that have slashed their profits, mining companies are unnerved by the swift policy change and say they are unlikely to invest more in projects in the country whatever the outcome.

“The new tax regime has not yet impacted the payments to the suppliers and contractors but there are some mines that are trying to take advantage of the situation but our appeal to all mines is to exercise genuineness and support the local suppliers and contractors the same way they support the foreign suppliers and contractors,” said Mubanga, adding that the mines should not discard the local suppliers and contractors “in the name of tax changes.”

Canadian company Barrick has announced that it would shut down its costly Lumwana mine.

Vedanta Resources, Konkola Copper Mines’’ majority shareholder, which employs about 8,000 staff in Zambia, has also said the new tax regime would cost it US $15 million in core earnings in the first quarter this year and has started a “deep review” of its mining operations Zambia.

“Our priority is to make sure that the business is viable, sustainable and generates positive cash flow. We’’ll look at all options,” Vedanta chief executive, Tom Albanese, said when asked whether job cuts were a possibility.

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