The government of Zambia is now making moves to throw Vedanta Resources out of the country. This is an escalating row over tax and alleged underinvestment on the latter.
The Zambia Consolidated Copper Mines (ZCCM), Zambia’s national mining vehicle, is seeking to have Vedanta subsidiary Konkola Copper Mines (KCM), its partner in the country’s largest copper mine, placed into liquidation.
Vedanta responded earlier this week by seeking to have the case referred to arbitration in South Africa.
Consequently, President Edgar Lungu, has accused KCM of underpayment of dividends and taxes, as well as underinvestment in the mine. The Zambian information minister, Dora Siliya, said that the state needs dividends from the KCM mines to invest in schools and hospitals across the country.
She further added that local suppliers in Zambia’s mining region, known as the Copperbelt, had been made to wait for payments. Ms. Siliya said the liquidator trying to sell Vedanta’s 80% stake in the mine had already had visits from Chinese, Turkish and Russian firms keen to buy it.
Meanwhile, a South African court has ruled that the sale process should be halted but the government has pressed on regardless.
According to local media reports, a source within the Zambian tax authorities said the company owed about US $100m in VAT, customs duties and other taxes, even once refunds due to the company were taken into account. KCM, which has previously been criticized over pollution, has also withheld US $10m in dividend payments.
However, Vedanta has since disputed this, saying that it was owed US $164m by the Zambian Revenue Authority and had not been informed about outstanding payments it was required to make. A statement from the company goes further to say that Vedanta had fulfilled its commitments in Zambia and was concerned about the apparent misuse of the legal process by the state’s mining authority.
