Zambia Waives Tax Restriction on Copper Exports -- Update

By Nicholas Bariyo

KAMPALA Uganda--Zambia has waived a controversial tax restriction on copper exports, the country's revenue authority said Wednesday, ending a near two-year standoff with companies seeking millions of dollars in unpaid tax refunds.

The rule, requiring mining companies to present import documents from the country of destination to get tax refunds, will be scrapped from Sept. 8, ending a spat over more than $600 million in accumulated value-added tax refunds that had been threatening to hobble the country's mining industry.

The development comes just a few days after the chamber of mines warned that copper mining companies are facing a financial squeeze due to the delayed refund, threatening output and jobs in the continent's second-leading copper producer.

Glencore PLC Chief Executive Ivan Glasenberg said Wednesday that the rebates would reinforce the Switzerland-based company's plans to expand its copper-mining operations in Zambia. Glencore is implementing a $323 million expansion project at its Nkana copper mine, which is expected to extend the lifespan of the mine by up to 30 years. The project is expected to come on stream in 2015.

"We've managed to find our way in Zambia. Yes we've had issues over things like VAT refunds, but it looks like they're resolving it," Mr. Glasenberg told reporters in Johannesburg.

Last month, hundreds of contract workers at Konkola Copper Mines, a unit of Vedanta Resources PLC (VED.LN), rioted and destroyed company property during a protest over delayed wages.

The chamber said the dispute had forced the postponement of investments worth $1.5 billion in the mining industry since last year. Companies affected include Vedanta, First Quantum Minerals (FM.T), Glencore PLC (GLEN.LN) Barrick Gold Corp. (ABX).

Last week, Zambia's finance minister, Alexander Chikwanda, said that the rule was undermining confidence in the country's economy.

Analysts say that Zambia, which last year lost its position as Africa's top copper miner to Congo for the first time since 1998, is likely to reclaim its position this year, as miners continue to deliver output from projects implemented during the global commodities boom, which peaked in 2011.

--Patrick McGroarty in Johannesburg contributed to this article.

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