Zambia’s president re-appoints mines minister to end tax row

LUSAKA (Reuters) – Zambia's new president Edgar Lungu on Thursday re-appointed Christopher Yaluma as mines minister in Africa's second-largest copper producer, to help end a row with mining companies over new royalties and tax refunds.

The simmering disputes, coming at a time when copper is near 5-1/2 year lows and economic growth in the southern African nation is faltering, have threatened investment and could result in shaft closures and jobs losses.

Lungu, elected president in January after the death in office of ex-president Michael Sata last October, last week directed the government to speedily end the two-fold disputes and his appointment of Yaluma could help diffuse the rows.

"Agreement over the new royalties and VAT refunds are obviously a priority. We also need to ensure that mines remain in production even with lower copper prices," Yaluma told Reuters after his appointment.

One of the disputes involves $600 million in Value Added Tax (VAT) refunds which the industry says is being withheld by the government. The second centres on a hike in January on royalty rates to 20 percent from 6 percent for open pit operations and those for underground mines to 8 percent from 6 percent.

Following complaints from the Chamber of Mines of Zambia that the higher royalties could force shaft closures and loss of about 12,000 jobs, Yaluma opened talks with mining firms last year but the talks were put on hold because of the election.