Zambian Mines Shelve $1.5 Billion of Investments After Tax SpatMatthew Hill
Zambian mines have postponed as much as $1.5 billion of investments because of a tax dispute that threatens jobs and output in Africa’s second-biggest copper producer, an industry body said.
While First Quantum Minerals Ltd. said last month that more than $1 billion of spending had been slowed or delayed, other companies have “shelved” investments of as much as $500 million, Zambia Chamber of Mines President Emmanuel Mutati said in an interview in the capital, Lusaka, yesterday.
“Our major shareholders couldn’t really consider any investment in Zambia for now,” he said. “Invariably there will be a drop in production at some point in the future, a drop in revenues and there could be drop in employment levels.”
Zambia Revenue Authority has withheld about $600 million in value-added tax repayments from mining companies that failed to submit documents from countries that import their copper. The mines say they can’t provide the papers because they sell to traders and don’t know the final destination of the metal. The spat that started last year may threaten plans to almost double the nation’s copper output to 1.5 million metric tons within five years, if more investment is deferred, said Mutati.
“This thing has dire consequences,” said Mutati, who plans to approach Zambia’s Vice President Guy Scott to resolve the dispute. “We’ve had meetings and meetings and we’re not progressing.”
Scott told lawmakers on June 27 that a statement by Matt Pascall, operations director at First Quantum, about $1 billion of investment being shelved was “ill-judged” and an attempt to “put pressure on us.”
Mines Minister Christopher Yaluma didn’t answer two calls to his mobile phone or a text message seeking comment. The government will repay the VAT refunds once the companies comply with the rules, he said on June 24. Mines owned by Glencore Plc and Vedanta Plc are also affected.
Zambia mined 790,007 tons of copper last year, according to the Ministry of Finance, making it Africa’s second-largest producer after the Democratic Republic of Congo.