Vedanta’s Zambia Unit Says New Tax Regime Won't Affect Jobs
(Bloomberg) -- Vedanta Ltd.’s Zambian unit will press ahead with expansion plans even as the government of Africa’s second-biggest copper producer increased mining royalties, and has undertaken not to fire any workers.
The assurance by Konkola Copper Mines Plc, following a meeting between management and government officials on Monday, is an about turn after the company announced earlier this month that the new taxes made some operations unviable and cut output at its Nchanga smelter. First Quantum Minerals Ltd. on January 23 also scrapped plans to fire workers in response to the higher payments.
“There will be no loss of jobs at our sites as a result of the new tax regime,” Venkatesan Giridhar, Konkola’s acting chief executive officer, said in an emailed statement Tuesday. “Our actions are designed to sustain and create jobs, grow the economy, and contribute more to the treasury.”
The company is spending as much as $1 billion on the development of the Konkola Deep mine in Chililabombwe in the country’s copperbelt and setting up a new refinery. Konkola was renewing its focus on Konkola Deep and would ensure further investment in the short to medium term, Giridhar said.
Finance Minister Margaret Mwanakatwe, who attended Monday’s meeting, announced in her budget speech in September that mining royalties would rise by 1.5 percentage points across the board from Jan. 1. The previous tax rates ranged from 4 percent to 6 percent, depending on the copper price. The government also introduced a 10 percent charge if the metal climbs above $7,500 a metric ton.
The Chamber of Mines, which represents companies including Vedanta, First Quantum, Glencore Plc, and Barrick Gold Corp., warned that the move could lead to more than 21,000 job losses and operators cutting $500 million in capital spending over the next three years.
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