Energy Minister Christopher Yaluma

Zambian Government rejects downsizing, mining companies cry for “relief”

The ongoing concern by mining companies over the withholding of over US$500 million by Zambia Revenue Authority (ZRA) from mines and other exporters has not gone well with the Government.

In recent weeks, there has been concern from various mining companies such as Mopani Copper Mines, Chambishi Metals, among others over the delayed resolution of the VAT refunds by the Zambia Revenue Agency.

Minister of Mines, Energy and Water Development Christopher Yaluma, has since implored concerned parties to resolve the matter amicably rather than through job cuts.

It is feared that any further delays to find a lasting solution might prompt mining companies and other private exporters to scale down more jobs and at the same time waive new projects for want of resources following the delays to resolve the US$500 million withheld to date.

While the mining companies argue that the delays have cost them business and the seeming possibility of them waiving various developments at their mines as well as suspending corporate social responsibility in various communities, where the mines had by the end of 2013 invested over US$100 million in social programmes, the Government feels there is a better way to come out of the predicament.

Yaluma told the Times recently that Government has objected to plans by Glencore-owned Sable Zinc Mine in Kabwe to retrench 170 employees following the placing of the company on care and maintenance due to the withholding of K64 million VAT refund by the Zambia Revenue Authority (ZRA).

Yaluma, who was commenting on the pending job losses at Sable Zinc, said as far as the Government was concerned, miners at the Glencore-owned company were guaranteed their employment.

“There is procedure to be followed when retrenching workers and as far as I am concerned, that procedure which requires a company to first of all inform the Ministry of Labour before down-sizing labour, has not been followed by Sable Zinc,” Yaluma said.

The problem is, in addition to other concerned mining companies, with the Chamber of Mines of Zambia denying that the outcries are not meant for “arm-twisting the Government” but merely to express reservations on the delayed dialogue over the matter.

This predicament involves resources needed for recapitalization of various old and new projects which the mines and other exporters want to complete in order to contribute to the nation’s Gross Domestic Product (GDP).

There are concerns that unless the matter is resolved amicably, Zambia’s projected copper production, expected to rise to 1.5 million tons per annum by next year or 2016 might not be tenable because most of the investments is still being withheld by ZRA.

The VAT refund policy was introduced in 1997 and is applicable globally. The mining companies have, since coming to Zambia after the unbundling of ZCCM, invested over US$8 billion in the industry, making it more viable than was the case under ZCCM when the Government spent an estimated US$1 million daily to keep the mining units pending privatization afloat.

Mopani has set aside over US$800 million to invest in shaft sinking in Mufulira and Kitwe while First Quantum Minerals, owners of Kansanshi Mine and Greenfield Kalumbila mine want to invest over US$2 billion in new projects to assist sustain the mines and create more jobs in addition to the more than 700,000 created since privatization in 2000.

Meanwhile, during the opening of Parliament on Sept. 19. President Michael Sata indicated with a directive to the Ministries of Mines and Finance to devise workable policies to allow investors and the nation to emerge with a “win-win” for all in the operations of the industry because it remains a mainstay of the economy.

The ZRA was recently cited by The Post as stating that it would only refund mining companies and other exporters based on receipts as proof of purchase, which the mines argue is a moot procedure as they are not aware of the final destination of the country’s red metal after it is sold on the international market.

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