Zambian Mines Union Sees Tough Wage Talks Amid Tax Disputes

Wage talks between Zambian mining companies and unions have been “very difficult” as companies in Africa’s second-biggest copper producer battle tax disputes and falling prices, a worker representative said.

“This year it has been difficult; there are a lot of issues these mines are looking at,” James Chansa, president of the National Union for Miners and Allied Workers, or Numau, said today by phone from Kitwe in Zambia’s Copperbelt province.

Companies are contending with lower copper prices, a spat with the government over value-added tax refunds, as well as a proposal to replace corporate income tax with higher royalties next year. The World Bank yesterday said the new system could lead to production cuts and job losses. At the same time, inflation in the country accelerated to the highest level in three years in November.

“This has made our negotiations very difficult,” Chansa said. “I must admit that the mines are going through difficult times.”

Labor groups including the Numau usually reach annual wage agreements by this time of year, because the accords take effect from Jan. 1, he said. Chansa’s union is the biggest in Zambia’s copper industry after the Mineworkers Union of Zambia. Numau is still in negotiations with local units of Vedanta Resources Plc and Glencore Plc, Chansa said.

Copper for delivery in three months has retreated by about 13 percent this year, closing 1 percent weaker yesterday at $6,415 per metric ton.

Chishimba Nkole, president at the Mineworkers Union of Zambia, declined to comment when reached by phone yesterday. Jackson Sikamo, president of the Zambia Chamber of Mines, declined to comment today.

Unions and most mining companies agreed to wage increases of 10 percent to 12 percent for this year. Zambia, where elections are planned for January after President Michael Sata’s death in October, saw inflation accelerate to 8.1 percent in November, the highest since 2011.

Before it's here, it's on the Bloomberg Terminal.