Zambia's Konkola says needs tax refunds to return to profit


David Paterson, Vice President of local economic development at KCM – a unit of London-listed mining company Vendanta Resources – said Konkola was owed about 200 million US dollars in value added tax (VAT) by the government.

Although Zambia’s finance minister had resolved to pay back future VAT returns, there had been no commitments on past payments, he said.

“From our perspective that situation is unresolved,” Paterson told Reuters on Wednesday at the Mining Indaba conference in Cape Town.


Peterson said the company was in talks with banks about repayment of debts.

KCM is one of Zambia’s high cost producers and has said it would have to its restructure operations after the government hiked mining royalties in January.

Zambia has been withholding the VAT payments from mining companies and other exporters it says have not produced import certificates from destination countries – a step the government says is needed for greater transparency.

(READ MORE: Zambia-Tanzania copper railway line reopens after strike ends)

The industry says that it is almost impossible to produce such documentation because it sells to multi-national trading houses, and has for months been saying it is owed 600 million US dollars.

Newly-elected Zambian President Edgar Lungu the row over new royalties and VAT refunds to be resolved soon.

Royalties are at 20 per cent from 6 per cent on open pit mines and 8 per cent from 6 per cent on underground mines.

Peterson said the government’s decision to repay future VAT returns was crucial to helping it move into cash generation, as the company made nil core earning in the last quarter.

Vedanta said in January that it would look at deep restructuring at the mine as it contends with operational issues and falling copper prices. 

Zambia’s Chamber of Mines said in December the new royalties would result in mining shaft closures and 12,000 job losses.