By Nicholas Bariyo
Special to DOW JONES NEWSWIRES
KAMPALA Uganda--Copper miners operating in Zambia are facing a
financial squeeze as they count the cost of a government delay in
paying tax refunds amounting to $600 million, threatening output
and jobs in the continent's second leading copper producer, the
Chamber of Miners said Monday.
The dispute centers on a new tax law that requires all copper
miners to present import certificates from destination countries
before claiming sales tax refunds.
But the Chamber of Miners claim that there members can't provide
documentation from importing nations because they sell to middlemen
and don't know the final destination of the metal.
"Copper exports follow a thorough documented procedure which is
verified at the Zambian port of exit…we hold that the documents are
sufficient and valid," the chamber said.
The chamber said the dispute has forced the postponement of
investments worth $1.5 billion in the mining industry. Some of the
mines affected include Vedanta Resources PLC (VED.LN), First
Quantum Minerals (FM.T), Glencore International PLC (GLEN.LN)
Barrick Gold Corp. (ABX).
The chamber added that the delay is making it difficult for
miners to pay salaries.
"Some operations are having difficulties in funding employees'
salaries," the Chamber of Mines said in a statement. "Severe
liquidity crisis faced by the companies has resulted either in
incomplete inability or delayed payments to suppliers and
contractors"
Last month, hundreds of contract workers at Konkola Copper
Mines, a unit of Vedanta, rioted and destroyed company property
during a protest over delayed wages.
Last week, Zambia's finance minister, Alexander Chikwanda, said
that government was considering relaxing the rule, because it had
proved hard to implement. In a July 15 letter to President Sata,
Mr. Chikwanda said the rule was undermining the confidence in the
country's economy.
A spokesman for Mr. Sata could not be reached for a comment.
Mr. Sata, has not appeared in public since mid June, amid
speculation about his ill health but government officials insist
that the president is well and in charge of the country.
The state tax body, Zambia Revenue Authority, said that although
there are plans to negotiate the refund, government has to first
reach settlements with some companies that have already taken the
dispute to court.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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