Zambia Daily Mail by Online Editor on 6/5/13
By STAFF REPORTER
KONKOLA Copper Mines (KCM) has asked the government for time to pay back an overdue KR136.8 million or US$25.8 million debt it owes the Zambia Revenue Authority (ZRA).
Zambia Daily Mail investigations have established that the Vedanta-owned company has held “high-level” talks to discuss the unbundling of the debt amounting to about US$25 million, according to documentation in possession of the newspaper.
The US$25 million debt was first discovered after a standard routine ZRA probe which commenced in April, according to documents.
“The ZRA carries out systematic announced probes in various companies, regardless of their ownership,” a source said. “It appears it is at this stage that they [ZRA] discovered the debt which then stood at about K33 billion which has now risen after penalties.”
According to Daily Mail investigations, the mining company has asked the government to give it “time to pay”, citing high costs of production in the industry even as copper prices remain buoyant.
The three months price of copper in London yesterday stood at US$7,450 per tonne after starting at about US$7,931 at the beginning of the year, which is still way above the forecast five-year price of US$7,250.
The revelation of the debt comes shortly after the company announced that it planned to cut some 2,000 jobs but later reversed the decision after discussions with the government.
KCM’s parent company – Vedanta – is valued at more than US$5.3 billion in London and its production costs rose by 8 percent to US$5,621 per tonne, as the price promises to rise in the coming years to about US$8,000 per tonne.
Commerce and Trade Deputy Minister Miles Sampa described the KCM debt as sad, given the fact that studies show that several multinational companies in Zambia are costing the country billions of dollars annually through tax avoidance or profit transfers.
“It’s very sad that we earn very little from our mineral exports and the little money we are supposed to earn is either delayed or not even collected at all,” Mr Sampa said. “We must swiftly plug this tax avoidance hole.”
KCM public relations manager Joy Sata promised to respond after a query on Tuesday.
Vedanta bought KCM 10 years ago at about US$25 million when copper prices were low and the cost of production was high, making mining unprofitable and mining assets cheap.