Zambia Vedanta unit halts operations at underground mine on tax concerns

According to Mining News Pro - Zambia, Africa`s No.2 copper producer, introduced new mining duties, increased royalties and plans to replace Value Added Tax (VAT) with a sales tax by April to help bring down mounting debt.

KCM said in a note to employees, seen by Reuters, that operations at the mine would be suspended from Jan. 4 due to low availability of acid as a result of rationalised operations at its Nchanga smelter.

Operations at the smelter were downsized due to low availability of concentrates after the government introduced an import duty on concentrates, KCM said.

"The introduction of 5 percent import duty on concentrates has made the smelting of imported concentrates commercially unviable," the company said.

KCM said it needed to import concentrates in order to meet smelter capacity and blending requirements.

The Chamber of Mines said last month mining companies may lay off over 21,000 workers due to reduced capital expenditure over the next three years due to the changes.