Konkola Copper Mines, Vedanta Resources Plc’s Zambian unit, is “totally encouraged” by President Edgar Lungu’s resolution to a stand-off with industry over mining tax changes, Chief Executive Officer Steven Din said.
A system that came into effect Jan. 1 raised royalties and scrapped profit tax for operators in Africa’s second-biggest copper producer. The mines chamber said it would lead to closures and about 12,000 job losses. The Cabinet this month approved a return to a combination of profit tax and royalties after Lungu directed his mining and finance ministers to review the amendments.
“What we’re totally encouraged by and impressed with is the leadership of the president,” Din said in an interview late Wednesday after giving a speech at the University of Zambia in Lusaka, the capital.
The 30 percent profit tax and 9 percent royalty that Zambia’s Cabinet agreed on is higher than the 6 percent sales levy of last year. Still, it’s a better outcome than royalties of 8 percent for underground mines and 20 percent for open pit operations the government began charging in January.
“KCM’s in a loss-making situation,” said Din. “We’re making a loss, but it’s better than where we were going to be.”
Zambia would be “chasing capital and chasing investment away” by retaining the tax regime introduced at the start of the year, Vedanta CEO Tom Albanese said in February.
“From what I can see, there’s quite a consultative approach that’s being utilized now,” said Din.