Vedanta "We shall not go to court nor renegotiate the new tax measures"

The Daily Mail reports that Konkola Copper Mines (KCM), owned by Vedanta Resources, will accept unconditionally Zambia's new mine tax regime.

KCM resident director, Deb Bandyopadhyay told the Daily Mail in an exclusive interview that there was no point in taking Government to court because the new mineral and royalty taxes were justified by the favourable copper prices on the global market.“The new taxes are an act of Parliament. We cannot fight with Government over something that is law. We shall not go to court nor renegotiate the new tax measures,” Mr Bandyopadhyay said.

He said the rationale behind Government’s decision to increase the mineral taxes was clear and that the matter would not be contested in anyway because KCM, the country’s largest integrated natural resources firm, was ready to pay. Mineral royalty tax has risen from 0.6 per cent to three per cent and company tax from 25 to 30 per cent with effect from April 1 this year. Some mine owners have threatened to take Government to court if it implemented the new tax regime, which they argue contradicts the legally binding development agreements they signed when they bought the mines. But Mr Bandyopadhyay said KCM would not waste time taking Government to court because it was obvious that it could not stick to the development agreements when a lot of things had changed in the mining industry.

KCM also has no plans to reduce its activities in view of the new taxes, but instead invest more. “We shall continue to increase our investments despite the new mineral taxes. Our US$1 billion investment in the KDMP and the smelter project are on track,” he said. He said while other mining companies were planning to cut their workforce to save for the new taxes, KCM would keep its workforce intact in view of the expansion programmes. Mr Bandyopadhyay said the company’s operations would go on smoothly and that there was no need to reduce on the workforce because that would send people on the streets.

In contrast, Mopani Copper Mines (MCM) last week announced that it would prune some workers to cut costs in order to meet the new tax obligations. So far, 40 expatriates have had their contracts terminated and the chop would be extend to some unionised workers. Government expects U$415 million additional tax revenue this year from the mining sector.