Wednesday, April 17, 2024

Tax War with Mines: KCM moves to Cut Operations due to New Government Tax Regime


Vedanta’s Africa Base Metals CEO Deshnee Naidoo with the KCM team during her familiarization tour of Konkola underground facilities recently.
Vedanta’s Africa Base Metals CEO Deshnee Naidoo with the KCM team during her familiarization tour of Konkola underground facilities recently.

Konkola Copper Mines has announced that it will downsize its operations after government went ahead to introduce a new tax regime which took effect on January 1.

According to a staff brief issued on Monday, management said it had been left with no choice but to downsize operations at Nchanga Smelter due to low availability of concentrates.

“Management wishes to advise employees and business partners that starting on 4th January, 2019, Banded Sand Stones (BSS) operations at Nchanga Underground Mine (NUG) will be suspended due to low acid availability as a result of rationalized operations at the Nchanga Smelter. Nchanga Smelter Operations will be downsized due to low availability of concentrates. The management was left with no choice but to scale down operations under the circumstances as the introduction of 5% import duty on concentrates has made the smelting of imported concentrates commercially unviable. KCM needs to import concentrates in order to meet smelter capacity and blending requirements,” read the brief.

“The new import duty has an impact on every tonne of copper produced resulting from imported concentrates. The current margins are thin and completely eroded through this impact, resulting in high production costs and operational losses.”

Management stated that areas which would be affected by the downsizing of the smelter included the Tailings Leach Plant (TLP).

“The TLP relies heavily on acid production at the smelter for the treatment of ore from Nchanga Open Pits, Nchanga Underground, Nchanga Stock Piles and Tailings Dams. Regrettably slow production at the TLP will negatively impact on NUG Banded Sand Stones (BSS) Production area, which has high acid consumption during the treatment of BSS in the TLP process plant. In view of this, NUG BSS treatment will be suspended to allowably low Gangue Acid Consumption (GAC) material to be treated at the TLP, while management continues to look at remedial actions,” read the brief.

“During this temporary suspension of NUG’s BSS production, the NUG workforce will be involved in key maintenance activities that will sustain production once the unit resumes full operations at a date to be communicated in due course.”

Miners have been asked to remain calm and continue to work safely, saying engagements with key stakeholders would continue in oder to resolve matters involving KCM operations.

Below is a copy of the staff communication from KCM.


  1. Here we go, the same OLD TRICKS at play again.

    If you CRY WOLF so many times, at some point people just stop believing you….this is the case with Foreign Minning Companies in Zambia.

    I hope our Govt doesn’t buy this cr@p!

    • Who will blink first?
      – Vedanta CEO Anil Agawarl’s net worth is now $3.3 Bilion, has bought operations in RSA, Australia, namibia acquired using profits from KCM. They came with nothing in 2004. There’s a video on youtube of how he duped Zambian Govt to buy KCM for next to nothing.
      – Ivan Glasenberg’s net worth is now $5 Billion with operations all over the world acquired using profits from Mopani & Kansanshi. First Quantum started with a small fire-hose & leach plant, reclaiming old tailings at old Bwana Mkubwa mine.

      Govt needs to fix the externalization of profits to tax havens.

    • There should be no curving. We are now immune to threats of job cuts. Factors that affect businesses include Govenment regulations and taxes.
      Taken for a ride for quite sometime now.
      Absolutely no way should Government squeeze its citizens outa hard earned money in the name of tax and loosen on these investors. Fair taxes ought to be paid by everyone doing business in the land. Peddle down.

    • When government through ZESCO increases electricity tariffs and Energy Regulation Board increases fuel prices they justify their moves as a business decision regardless of how it affects the citizenry, what then should stop KCM and other Mining companies to make business decisions.

    • Ati and I quote “… KCM needs to import concentrates in order to meet smelter capacity and blending requirements” End of quote.

      Solution, all the ingredients needed to make the concentrate are locally available in Zambia. Start manufacturing them locally.

      The mining companies did not want to do that vertical integration because they used VAT refunds to help fund operations.

      Now the rubber has met the road and it’s time to do the right thing … let’s roll.

  2. After the president issued hollow threats the same mines have done what they think is right. President Sata taught that CEO from the mines who disrespected him by declaring him illegal immigrant when he left for South Africa instead of meeting the president. The real president showed him that authority is authority but puppets will only pretend that they are siding with Zambians but actions from the mines prove that our government in particular the president is toothless. Wait next week you will hear people have lost jobs where the president will be busy bringonh peace in DRC as if his people are at peace.

    • What with Zambians supporting these imperialist investors. These guys have failed to reveal specifics but instead have opted for threats. When we fought for independence we were never afraid of consequences and so it should be with the economic independence. Of course in every battle there always casualties. If you retreat you will never reach your destination.

  3. I have always said there is nothing for patriots like me to be excited about in this.If we don’t have a sound plan B we are bound to bow down. These are hardcore capitalists. They have done their homework unlike our team

  4. The government should start looking for new investors even before these others leave or they should repossess the mines and am supporting the government on this one

    • If only repossessing is so simple. Can GRZ run the mines? I doubt it. Would potential new investors want to get involved with what the former owners went through? I doubt it. What about compensation? LAP GREEN comes to mind. What about credibility in the international market? Rating agencies? Welcome to the real capitalism!

  5. Grab the mines and list them on the stock exchange like it is done in SA,just ensure govt is the major shareholder…. These capitalists don’t want to pay what’s due to Zambians

    • I doubt if grabbing is as easy as that. I’m sure there is compensation to be paid.Then we have to re-operationalize the mines if we want to run them ourselves. That is if we have the money. Conversely, we have to float offers to alternative investors who may even be from the same cartel. I’m just thinking…but that’s why the GRZ team should have a formidable plan B

  6. Magufuli had a well thought out Plan A based on solid facts and not hot air!
    With Zed, our plan A is just hot air – huffs, puffs and empty threats without numbers to show. We don’t even have a solid plan B.
    Are we still surprised why we are a wretched nation where foreigners get everything for nothing?
    Even our wildlife has been depleted in the so called national parks. Some South African nationals were caught at one point red handed with our wild animals they were smuggling to their country. We have not heard what has become of those chaps. Anyone can come into our country, get what they want and leave. We are very poor at doing contracts!

  7. – Can we run these mines ourselves yes-but massive mindset change is required so no we can’t
    – The problem is we treat these foreign-investors like gods. Our laws are weak so is the leaders from bottom up
    – In Africa as long as some government official is getting brown envelopes then everyone will suffer(no morals)
    – This is an eye opener for us as we see these so called Chinese investors that ba lungu is bringing them too will create anarchy in our land.
    – The only way we can deal with these billionaires mine owners is we need to think and act smart, we have to put our minds together but the problem with PF guys is their too emotional, their not calm people they lack common sense and they only listen to kiezer zulu.

  8. The moment we sold our mines to the devils we lost our country. You can not have copper in your country and yet do not control its mining and sales….
    Not even in Botswana or Zimbabwe did the allow such a thing! You call yourselves copper producers and yet it is all in the hands of foreigners….it is time to be strong!

  9. The truth is that some of these “mines” do not actually mine anything. They are simply processing plants for imported concentrates. Tell them to start mining ir get out!

  10. The smelter has always had not enough concentrate from as far back as 2010. This is almost 10 years, simply because KCM was consistently failing to pay FQM for the concentrates supplied to them. Now that FQM have a smelter and with KCM’s style of payments, even concentrate imports have not pushed up concentrate treatment at Nchanga Smelter.
    Same old story…. maybe even FQM’s games are worth listening to.

  11. There was a time the mines were doing badly and a committee was formed to look at the causes. One reason given was that there was poor planning because the planning sections were composed of mere technicians in mining. This didn’t solve the problem so World Bank consultants came in and surprisingly they pointed at the Zambian managers as the cause of poor performance. They recommended that either these managers who were mainly university graduates be demoted or be given the option for voluntary separation. Many opted to leave to avoid embarrassment.

  12. Video of Anil Agarwal speaking in March 2014 reveals how he bought KCM for just $25 million.
    Anil Agarwal also explains in detail how he came to buy ‘the largest copper mine in Africa’ at Konkola, describing how he took a chance by offering only $25 million rather than the $400 million asking price.

    He describes his surprise at receiving a VIP welcome in the Zambian parliament, and ridicules the then Zambian President Levy Mwanawasa for claiming that Vedanta would improve the lives of Zambians, saying:

    “He told the entire parliament that what great people we are, and our empire, and that they will make our lives gorgeous. And they will make schools, make hospitals and blah blah …”

  13. Leave politics out of this plize you are staying in Canada comfortably and commenting trash about this pliz this is serious and am speaking as one affected we don’t want to loose employment due to politics and bad policies you came in power on the pretext of being a pro poor government pliz we don’t want to loose employment in this very hash economy our little ngwee’s will be swallowed by taxes am not a politician but affected worker , u stay in Lusaka or not a miner pliz stay away.u don’t know what u r talking about.

  14. This is getting out of hand now. An opportunity has come to find viable investors to partner with on 50-50 those willing to pay the same Sales Tax. So all this cry clearly shows hw govt through VAT refunds used to finance mining Operation. Let them close up we shall eventually come out stronger

  15. KCM antics to leverage subsidies from the Zambian people through cheap ZESCO power, VAT refunds, zero import duties, the squalor of townships, illicit export of cobalt and avoidance of windfalls tax have come to a crashing end. By now with all these sacrifices from Zambia, what was expected was a top-notch mine in Konkola Deep producing over 400,000 tonnes of copper with commensurate benefits to Zambia. The racket has been unveiled. No more of it.

    Pack and go. Leave the tailings to Gerabos. Benefits to people of Zambia are plenty there with booming housing sector and revenue to the shopping malls.

  16. We as miners are in support of you GRZ please don’t back down to these black mailing antics. Redundancies are not new to us. If they can’t survive its high time they surrendered the mines.

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