Zambia mines minister says Glencore unit lay-offs "illegal"

by Reuters 0

The minister said this after the global mining group and commodities trader announced its plans to cut almost 170 jobs amid a row over VAT tax.

“We don’t tolerate retrenchments done without following procedure,” mines minister Christopher Yaluma told Reuters. Zambia has in the past threatened to revoke the mining licenses of companies planning to cut staff.

(READ MORE: Glencore unit suspends Zambia copper projects over tax row)

Yaluma said Glencore had not officially communicated with the government as required under Zambian law before cutting the labour force.

[DATA GLN:Glencore] last week maintained it had followed correct procedure, saying “its decision is acknowledged by the relevant ministries within the Zambian Government, following their receipt of formal notification that has been completed in accordance with the law.”

Glencore cited the government’s withholding of 12 million US dollars in VAT refunds from its zinc operation, Sable Zinc Kabwe Limited, as one of the reasons behind the decision.

Africa’s second-largest copper producer has been withholding 600 million US dollars in VAT refunds owed to mining firms, after companies failed to produce import certificates from destination countries.

The finance ministry has since said it plans to waive the requirement because it is impractical.