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22.05.2019 Zambia

Focus on Africa:Zambia in battle over copper royalties

By William Niba - RFI
LISTEN MAY 22, 2019

Zambia tries to reclaim strategic copper mines as debt burden worsens.

Zambia placed one of the country's major copper mining companies Vedanta in liqudation on Tuesday [May 21st, 2019] in the wake of their continued refusal to pay a new value-added tax, in breach of the country's mines and minerals Act. It has also threatened to do the same with Glencore.

The Zambian Observer claims that the public ZCCM Investment Holding petitioned the Lusaka High Court to place the giant Konkola Copper Mines Plc under its tutelage on Tuesday.

President Edgar Lungu threatened to “divorce” Vedanta and Glencore Plc during a week-end visit to the strategic Copperbelt province.

"Enough is enough, people are tired, the sales tax is here to stay and those who don't want it, will leave," the president told cheering supporters as he visited the mining town of Ndola, around 300 kilometres north of the capital Lusaka at the week-end.

Lusaka Times says Vedanta and Glencore Plc made their situation untenable not only by skipping their fiscal obligations but by blackmailing the government with production cuts and massive retrenchments.

Meanwhile, Zambian Eye carried breaking news on its website that a high-powered delegation from the ZCCM had left Lusaka for the northern city of Chingola to take over the mine.

RFI sources in the Copperbelt province say the facility has been under police protection while liquidators finalize a case of insolvency against Vendanta Mining Plc

According to Lusaka Times,Zambia's Mine Union staged a solidarity demonstration in support of the government's move to take over the Konkola Copper Mines in Chingola and Chilibombwe on Monday.

Vedanta and Glencore have reportedly enjoyed huge contractual privileges since the privatization of the mining sector 20 years ago, benefitting from tax exonerations and preferential tariffs from the national power utility, says Lusaka-based economist Chibanda Kenyama.

He spoke after shocking submissions made at the Lusaka High Court by agents of the state-backed Zambia Consolidated Copper Mines Investment Holding that Vedanta has paid only 51 million euros to the state since it took over the mines in 2004.

While Zambia struggled with a debt burden of close to 14 billion euros, (70 percent of her GDP), the London-based anti-global poverty charity War on Want states that the country loses close to 2.6 billion euros due to corporate dodging.

The national currency (The Kwacha) fell as much as 1.7 percent to 14.3152 against the US dollar on Monday as the markets reacted to the move against Vedanta and Glencore. That's more than a 14 percent drop against the dollar in a single year, and the weakest value of the Kwacha since 2015.