CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
Mining company Vedanta and its Zambian unit Konkola Copper Mines (KCM) said they were seeking urgent talks with the Zambian president following a high court order on Tuesday to appoint a provisional liquidator.
The news has rattled foreign investors already nervous governments in central African countries are seeking a much bigger share of resource revenues, which they say will discourage investment the region desperately needs.
A day after President Edgar Lungu announced a plan to strip KCM of its mining licence and bring in new investors, a high court document seen by Reuters, named Zambian law firm Lungu Simwanza & Company to oversee KCM.
Zambia, Africa’s second-biggest copper producer, has proposed tax changes the president says he will push through, despite opposition from international miners
According to the document, the firm is appointed to act “as provisional liquidator” until the conclusion of the hearing of a petition, brought by Zambia’s mining investment arm ZCCM-IH under Zambia’s corporate insolvency act, or a further order. ZCCM-IH owns around a fifth of KCM, while Vedanta owns the rest, barring a golden share held by the government.
Vedanta and KCM issued a joint statement reiterating a request first made on Monday for “an immediate and urgent meeting” with President Lungu.
It said Vedanta had invested more than $3 billion since acquiring its stake in KCM in 2004 and employs nearly 13,000 people.
“Exponential rises in taxes, duties, fuel and power costs have placed an enormous and unaffordable burden on the company,” the statement said, adding the Zambian government owed it more than $180 million in VAT refunds.
Zambia, Africa’s second-biggest copper producer, has proposed tax changes the president says he will push through, despite opposition from international miners.
They include a new royalty regime, which financial analysts say at the marginal rate would result in a more than 100 percent tax take, and a proposal to replace VAT with a non-refundable sales tax.
Presidential spokesman Amos Chanda told Reuters on Monday the government had to intervene “because KCM is too big to fail”.
“The government is actively in talks with potentially private investors for KCM,” he added. “There will be no takeover. No seizure of private assets.”
The International Monetary Fund has repeatedly warned that Zambia is struggling with high debt and shrinking foreign currency reserves.
One of Zambia’s biggest tax payers First Quantum had threatened to lay off workers because of the new taxes, but later said it had abandoned those plans and was talking to the government.
Glencore has said it will close two mine shafts because they have reached the end of their economic life. Union leaders have urged Glencore to reverse that decision.
Zambia’s currency, the kwacha fell nearly 2 percent on Monday and was down around the same amount on Tuesday.
(By Chris Mfula and Barbara Lewis; Editing by Louise Heavens and David Evans)
