(right) and his Deputy George Zulu (centre) inspect the Lusaka fuel
storage depot with Lusaka Province Minister Obvious Mwaliteta before
commissioning of the plant
GOVERNMENT is disappointed that the mining industry is using blackmail to push for value added tax (VAT) refunds, Minister of Mines, Energy and Water Development Christopher Yaluma has said.
And Glencore-owned Sable Zinc Mine Limited in Kabwe has retrenched 170 workers and placed the company under care and maintenance.
In an interview in Lusaka yesterday, Mr Yaluma warned that Government will not allow mining companies to hold it to ransom.
“Mining companies need to be straightforward and not try to bend rules. As a government, we will not tolerate this. Before they [investors]come here to invest, they set aside capital to run their operations.
“But how come they are now basing their businesses on VAT refunds? If that was the case, we would not have allowed them in the first place,” Mr Yaluma said
The minister was commenting on reports that Glencore’s Sable Zinc Mine in Kabwe has laid off 158 employees citing Government’s refusal to pay VAT refunds.
Recently mining companies have been advocating VAT refunds but Government has demanded proof of exports by way of receipts from the importers before effecting payments.
Mopani Copper Mines (MCM) has also threatened to suspend capital projects and to retrench workers over US$200 million VAT refunds withheld by Government.
But Mr Yaluma wondered when mining companies started to rely on VAT refunds to run their businesses.
“Government has not yet received official communication on the reported laying off of workers at Sable Zinc. But if it’s true, then they will have to undo the retrenchment and that is when we can talk,” Mr Yaluma said.
Mineworkers Union of Zambia (MUZ) general-secretary Joseph Chewe confirmed in a separate interview that 158 unionised and 12 senior employees have been retrenched at Sable Zinc Mine Limited in Kabwe.
Mr Chewe said the retrenchment has been necessitated by delays in the enforcement of the Zambia Revenue Authority (ZRA) VAT Rule number 18 (1) (b).
He said MUZ is in receipt of correspondence of notice of redundancies from Sable Zinc Mine Limited.
He said the company has officially written to MUZ and that 158 unionised employees have since been declared redundant.
Mr Chewe implored Government to resolve the controversy surrounding VAT Rule 18.
According to a letter of notice of redundancies signed by Sable Zinc general manager David Littleford obtained by the Daily Mail in Kitwe, the last day of the affected employees will be November 17, 2014.
Mr Littleford said the withholding of VAT refunds has affected cash flow and made it impossible for the company to continue operations.
The refundable VAT being withheld for Sable Zinc, according to the letter, amounts to K64,905,765.
“Sable Zinc has been forced to place its operations under the Mineral Processing Licence 102158-HQ-MPL, on care and maintenance,” Mr Littleford said.
Yaluma, there is nothing wrong with that
This is an African country where corruption, bribes, and blackmails happen every second.
Thanks
The problem is that the investors know that Zambians are a desperate lot who view investors as small gods.By this action they are sure that you will bend the rules.
However, if I were you,I would take over the mine as a government and run it,since they have showed us that they are failures and cannot be trusted.
Mr Yaluma, thank you Sir for showing muscle.
Zambia can’t be pushed around like this. Glencore should not be operating from Zambia with its record with us. If these investors left we would be better off. What they want is a system where we have no control over our resources and that we pay their running costs! This is insane. We have the right to demand proof of sale in order to pay VAT. Even here in UK, I get my receipts showing VAT paid on my purchases or restaurant bills AFTER a sale. That pertains to an ACTUAL sale. It shows clearly the details of who sold what, amount paid for those goods and then shows clearly the VAT added on that sale which I can claim on my way OUT of the country.
It is not unreasonable. Investors must follow our VAT rules or not get refunds.
I literally could burst a gasket, with fury over these blackmails. PF should not give in. These people ultimately control our gov’t or are attempting to!!
How dare they play with our economic well being by these games. We can’t be held ‘over a barrel,’ by this community of investors. Dirty, grabbing foreigners out for a quick buck. The opportunities offered in Zambia were not meant to start a new ‘scramble for Africa,’ or a new ‘Gold Rush.’ We hear that we have illegal foreign prospectors in our country already mining our gems.
We need better control. Unions should not start industrial actions but work with the gov’t in taking forceful control of the abandoned mines and offer work to our miners. I think the gov’t should have contingent plans for control; not to…
Nice try. Now please provide receipts and proof then you can get your refund. Simple. There are plenty of other investors big and small interested in what Zambia has and the risk will go down with the currency hedging. While all these shenanigans are happening, we need to look at other industries.
Also we want accurate accounts of exports of product and raw materials.
They are bluffing. They have no intention of leaving the profits they make in Zambia they just want to strong arm government into having their way. Don’t fall for it.
Well said Hon. Minister.
Please remain resolute.
Stand your ground.
Do not be blackmailed.
YOU HAVE OUR BACKING SIR!
Iam sure the government has learned its lesson that treating the mining companies with kid gloves ( over equitable taxes etc) in the hope for favours does not work. The companies demand their pound of flesh and have no problem laying off thousands if what is due to them ( VAT refunds) is not paid. Cheerleader Yaluma has egg thrown on his face despite being a “company manager” for the mining companies.
This is due to Mr Chikwanda’s decision to ask the head of state about refund. If The Mining companies are not making profits then they can go to leave the mines period.
Mr. Yaluma your govt promised the mines VAT refund at the time of investment. You cant just change rules any time you feel like unilaterally playing the populist game or you stand in breach the investment accord thus risking govt being dragged before the courts.
Its also dumb to say the mines should only use their own capital, baba business financial plans will always include all types of income. Every zambian jim and jack wants to talk about every subject like they know it. Thats why he calls you lunatics. And yes ABC and Chipimo know what they are talking about, open your ears and listen to what they are saying
We can change our laws as required, like any country.
We have the right to protect our Revenue, and resources. We have to provide for citizens of Zambia. If something is not working, we must attend to it.
I support the mines. The vat must be refunded. ZCCM failed to run the mines. Thats why u sold the mines. Try to frustrate the mines and see what will happen to yo stomachs.
We will not be threatened. If our gov’t will not hear us, we will not vote them in 2016. Period. Let’s see what happens to their stomachs.
ensure also for safety reasons mines submit returns in Financial to assess their adequacy according to minimum capital requirements and liquidity to support safety of operations and assurance of going concern just like regulated in other sectors like financial and other to protect both the players and the general in particular from shocks that may arise by sudden surprise in working capital requirements
Great move sir….these guys must first produce receipts otherwise let them forget about the refund. Law is law which every person has to follow….no receipt no refund period.
This PF government cannot even tell the people of Zambia what is happening to their OWN TAX MONEY…….. IN ZAMBIA! The auditor- general reports so much UNACCOUNTED FOR, so much NO RECEIPTS, so much for UNBUDGETED EXPENDITURE etc.
And they expect the mining companies to provide documents on what happened to our copper after it was sold by a middleman or trader on the other side of the world!
Get real people! When you buy a car it has copper wires in it. Do these PF *****s expect the mining companies to provide receipts for every car sold?
The real problem is that the money has already been used on by-elections and this is just another PF lie to hide their useless management of the economy.
Why is it acceptable for the government of Zambia to withhold the VAT reimbursement that is due to the mining companies? The government is violating its own rules and regulations and causing uncertainty in the business atmosphere. The companies cannot operate like piggy banks for a bankrupt government of an ailing dictator. Once the companies shut down, Zambians will face widespread shortages like they did with the first republican dictator KK and they will march barefoot and hungry to state house and kick out this *****.