Zambia's president vows to prevent job losses at Barrick mine

The new Zambian head of state President Edgar Lungu attends the opening ceremony of the 24th Ordinary session of the Assembly of Heads of State and Government of the African Union (AU) at the African Union headquarters in Ethiopia's capital Addis Ababa, January 30, 2015. REUTERS/Tiksa Negeri·Reuters· (Reuters)

By Chris Mfula LUSAKA (Reuters) - Zambia's president said on Monday his government would not allow mining jobs to be lost at Barrick Gold's copper mine after workers went on strike to protest against the company's plans to suspend operations due to high royalties. Zambia in January hiked mineral royalties for open pit operations to 20 percent from 6 percent, prompting Toronto-based Barrick Gold to say it would suspend operations at its Lumwana Copper Mine, which supports nearly 4,000 direct jobs. In a statement, President Edgar Lungu suggested one measure to be explored could be to find a new partner to jointly run the mine with the government if Barrick closed it. The newly-elected president said the mine should remain operational and that he would "not allow a single mining job to be lost". This mirrors the populist policies of his late predecessor Michael Sata. Zambia's tussles with miners over royalties and Value Added Tax (VAT) refunds threaten investment in the country and come at a time when copper is near 5-1/2 year lows and economic growth in Africa's second-biggest copper producer is faltering. Zambia's Chamber of Mines warned in December the new royalties would result in shaft closures and 12,000 job losses. More than 2,000 unionised workers at Barrick's Lumwana copper mine stopped work on Monday demanding to know what will happen to them when the company closes the business. "They are demanding to know their future when the mine is closed," Amos Malupenga, the top civil servant in North-Western province, told Reuters. On Feb. 3 Lungu directed the government to resolve the row with mining companies over royalties and VAT refunds. He said on Monday the revenue authority was in talks with mining firms to resolve the royalties dispute. Zambia's revenue authority Commissioner General Berlin Msiska separately said the tax body had relaxed a rule requiring exporters to produce documents from destination countries to claim VAT refunds. The authority would now accept transit documents from exporters claiming VAT refunds. Zambia has been withholding VAT payments from mining companies and other exporters it says have not produced import certificates from destination countries - a step the government says is needed for greater transparency. The industry says that it is almost impossible to produce such documentation because it sells to multi-national trading houses, and has for months been saying it is owed over $600 million.

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