Thursday, January 16, 2014

Vedanta chairman in Zambia over KCM, govt standoff
By Chiwoyu Sinyangwe and Joan Chirwa-Ngoma
Sat 16 Nov. 2013, 14:00 CAT

VEDANTA Resources chairman Anil Agarwa is in the country to help resolve the standoff between its subsidiary Konkola Copper Mines and government.

And former mines minister Dr Kalombo Mwansa says mining companies should be made to pay appropriate taxes to the government.

Meanwhile, Dr Mwansa says allowing mining companies to export copper concentrates without adding value is unacceptable.

Vedanta Resource which is London-listed owns a majority stake in KCM.
On November 2, KCM announced plans to lay off over 1, 500 workers in the next three years as it migrated towards automation and mechanisation at Nchanga Underground.

The move by KCM unnerved President Michael Sata who said embattled chief executive officer Kishore Kumar would be sorted out for attempting to blackmail Zambia.

"If he's threatening us that he wants to lay off people at Konkola Copper Mine let him lay off one person, then we take away the licence from him; that's the best way of laying him off because investment should be for the people," said President Sata on November 5.

"And if that Mr Kumar wants to threaten us, to blackmail us, he can go to hell. We shall sort him out."

Mines minister Christopher Yaluma confirmed that Agarwa arrived in the country yesterday to help the troubled mine.

"Yes, I am supposed to meet him Agarwa this evening," said Yaluma.

And Yaluma said no miner would be retrenched at KCM.

"We had told them that that was non-negotiable and the President made it clear that whoever laid off even a single worker at KCM...and obviously you saw what happened," said Yaluma.

On November 9, Kumar 'voluntarily left' Zambia after home affairs minister Edgar Lungu demanded a meeting with him to discuss his "rhetoric" taunt targeted at President Sata on November 8.

Kumar, who is also chief executive officer for Base Metals Africa, left the country aboard South African Airways.

And Dr Mwansa said Zambia had room to collect enough revenue from the mines through proper taxation.

"We don't get enough from the mining industry. Whatever revenue we can get, we must get it. We must do everything possible to maximise revenue," he said in an interview yesterday.

With an industry that is estimated to be worth around US $10 billion, Dr Mwansa said it was unacceptable for the mines to contribute below US $600,000 (about K3 million) to the treasury in form of taxes.

"On the revenue side, we are very low. Every avenue we can get to increase revenue from the mines should be looked at," he said.

The government recently raised mineral royalty tax on copper from three per cent to six per cent, but shelved plans to re-introduce windfall tax on copper that was suspended by Rupiah Banda's regime.

Dr Mwansa said the country's efforts in the mining industry must be towards value addition, and supported President Sata's statement that mines "should not be allowed to export soil".

Finance minister Alexander Chikwanda on October 4 signed statutory instrument (SI) 89 which allowed mining companies to export copper concentrates tax free.

But President Sata cancelled SI 89, saying mining companies should not be allowed to export copper without adding value.

SI 89, which was to be in force up to September 30, 2014, was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition and to improve accountability in the vast mining sector.

SI 89 has since been replaced with SI 99 to reinstate the 10 per cent export duty on copper concentrates and ores, which Chikwanda briefly abolished after being lobbied by First Quantum Minerals and Lubambe Copper Mines.

"It's not good to export soil, like the President put it. We have to add value… Mining companies can also put resources together to put up a big smelter," he said, and advised the government, mines and mine workers unions to promote dialogue in the industry.

His comments follow KCM's plan to lay off over 1,500 workers as the company seeks to switch to mechanisation.

"If they (mines) have a problem, they should sit down with the government. There is need for government, mines and the unions to find time to sit and exchange ideas. They should not only meet when there is a crisis," said Dr Mwansa, adding that the current government's policies on the mines and job creation were good.

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