Konkola Copper Mines (KCM) will increase refined copper output in Zambia following a decision by the Zambian government to resume VAT rebates related to copper exports, the company said on Monday February 23.

The commissioner-general of the Zambia Revenue Authority signed a statutory instrument mandating the resumption of VAT payments on copper sales on February 19, Zambia’s presidential press office said on February 23.

KCM, a subsidiary of Vedanta Resources, celebrated the decision to resume the payments, but signalled that it is still yet to find agreement over other issues including back-payments of the rebates, new mining royalty rates and planned increases in electricity tariffs.

The government’s decision to restart VAT refund payments will nevertheless allow KCM to once again process third-party concentrates at its custom smelter in Zambia, the company said.

KCM has been running the plant at 50% using integrated feed since the issue over VAT payments arose, as the decision to withhold rebates made it uneconomical to purchase third-party feed from other mines in Zambia, KCM announced on Monday.

Copper producers in Zambia including KCM, Glencore subsidiary Mopani Copper Mines and ENRC are owed about $600 million in VAT rebates on copper exports sold since 2012, Metal Bulletin reported in October. 

“With issues around repayment resolved, KCM will be able to profitably purchase copper concentrate from neighbouring mines for processing at its smelter,” KCM ceo Steven Din said in a statement on Monday.

“This will expand production and enable increased beneficiation of copper in Zambia. However, we have a number of further challenges that need to be addressed,” Din said.

“The issue of the refund of past VAT payment needs to be resolved. We hope to see amendments to the new mineral royalties and electricity prices,” he said.

The Zambian government introduced a 20% royalty on gross revenues from open pit mining at the start of the year, in a move that has prompted KCM to place its operations under economic review and Barrick to transition the Lumwana mine to care and maintenance.

However, as it announced the changes to VAT rebates, the state press office also said that president Edgar Lungu is “rapidly addressing [miners’] concerns over the royalty”.

Lungu also expressed regret over the planned idling of Lumwana and said the government will take steps to continue no jobs are lost at the mine, which employs about 4,000 people.

“If the investors proceed to idle the mine, one of the measures to be explored will include the identification of a suitable strategic technical partner to team up with ZCCM-IH, the government’s investment arm in the mining sector to assume the operations,” the presidential press office said on Monday.

Mark Burton
Twitter: @mburtonmb