Glencore, a global mining group and commodities trader, has confirmed that it is suspending its operations at its zinc unit in Zambia over a VAT tax row.
Zambia, Africa’s second-biggest copper producer, is considering raising its mineral-royalty rate and removing corporate tax for mining companies, and will only repay the cash when companies produce import certificates from destination countries. It is withholding a total of $600 million in VAT refunds owed to mining firms.
Glencore said in a statement it was placing Sable Zinc Kabwe under “care and maintenance” – which means operations are being halted in response to the current local economic environment in Zambia, as well as the cash flow restrictions caused by the withholding of around US$ 12m in VAT refunds.
Aside from the lay-offs, Glencore also said Sable was curtailing all expansion capital projects.
First Quantum Minerals Ltd., based in Vancouver, is the biggest copper producer in Zambia, while Mopani Copper Mines, a unit of Baar, Switzerland-based Glencore Plc (GLEN), and Mumbai-based Vedanta Resources Plc (VED)’s Konkola Copper Mines also have operations in the Southern African country. Barrick Gold Corp. (ABX), based in Toronto, owns the Lumwana copper mine.