LUSAKA (Reuters) – Zambia will fine and break ties with mining firms that fail to operate according to the southern African country’s laws, President Edgar Lungu said on Thursday, escalating a dispute with India-listed Vedanta.
Vedanta is fighting Zambia’s decision last month to name a provisional liquidator to run its Konkola Copper Mines (KCM) business and is seeking international arbitration.
Zambia, Africa’s second-largest copper producer, says KCM has breached the terms of its licence.
The dispute between Vedanta and the Zambian government has intensified concerns among international miners about rising resource nationalism in Africa.
Lungu said in a statement at a mining and energy conference in Lusaka that the government expected investors to operate within the confines of the law.
“Failure to do so will result in the government imposing sanctions and disengaging with the unwilling parties,” he said in the statement read out by Mines Minister Richard Musukwa.
Zambia’s Chamber of Mines said last month that 2019 copper output could be as much as 100,000 tonnes lower than last year because of changes to mining taxes.
Zambia plans to introduce a new non-refundable sales tax in place of Value Added Tax, despite criticism from mining companies.
Lungu disagreed with the Chamber of Mines’ predictions, saying the government forecast copper output would reach 890,000 tonnes by the end of the year, more than last year.
He said the government was ready for dialogue with miners, which account for 70 percent of export earnings.
But he added: “The government will not take kindly to any form of arm-twisting on the part of industry with regard to meeting their obligations.”
Reporting by Chris Mfula; editing by Emelia Sithole-Matarise