Glencore mines stilled as Zambian dispute simmers

Monday, 6 October, 2014

This is quick follow up to our piece at the end of last week on the Zambian Chamber of Mines’ call to government to accelerate promised VAT refunds to miners

The call came as the latest move in disputes between the Zambian government and extractives companies active in the country that have simmered for some time.

Now mining monolith Glencore have have stopped operations at its Zambian zinc mine and its copper projects, until the government extracts the proverbial finger with regard to owed taxes.

Now, according to, Glencore has announced it is placing Sable Zinc Kabwe under "care and maintenance" in response "to the current local economic environment in Zambia, as well as the cash flow restrictions caused by the withholding of around $12 million in VAT refunds."

This move will kill 169 jobs at the mine.

Zambia began enforcing the tax rule at the root of the disputes last year in order to curb tax avoidance. The aim was to repatriate foreign currency made from exports back to Zambia in order to quell tax evasion, mainly in the mining sector.

As admirable as the goal was, as early as this August finance minister Alexander Chikwanda was announcing the decision to relax the rule because it was so difficult to implement. Lack of documentation from importers outside Zambian jurisdiction was the achilles heel, and once again the business trumped weak national jurisdiction.

At present the government is still holding back hundreds of millions of dollars owed to mining firms including Barrick Gold, Vale and Vedanta Resources.