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Zambia to break ties and fine mining firms that fail to operate according to the country’s laws

Zambia will fine and break ties with mining firms that fail to operate according to the southern African country’s laws. President Edgar Lungu made the announcement mid-last week, a move that has since escalated a dispute with Vedanta Resources.

According to local media reports, Vedanta is fighting Zambia’s decision to name a provisional liquidator to run its Konkola Copper Mines (KCM) business and is seeking international negotiation. The decision was announced in May 2019.

Zambia, on the other hand, said that the announcement was as a result of KCM breaching the terms of its license. The dispute between Vedanta and the Zambian government has since intensified concerns among international miners about rising resource nationalism in Africa.

Speaking at a mining and energy conference in Lusaka, President Lungu said that the government expected investors to operate within the confines of the law. He further cautioned that failure to adhere to the same would result in the government imposing sanctions and disengaging with the unwilling parties.

Last month, Zambia’s Chamber of Mines said that 2019 copper output could be upto 100,000 tonnes less compared to last year. This has been attributed to recent changes to mining taxes. Moreover, Zambia plans to introduce a new non-refundable sales tax in place of Value Added Tax. This is despite criticism from mining companies.

Lungu disagreed with the predictions and sentiments of the Chamber of Mines’. Conversely, President Lungu said that according to the government forecast, copper output would reach 890,000 tonnes by the end of the year. He further added that the government was ready for dialogue with miners, which account for 70% of export earnings.

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