Global mining group and commodities trader Glencore said on Friday it was suspending its zinc unit in Zambia and was cutting 169 jobs at the mine amid a row over VAT tax.

According to a Reuters report, Africa’s second-largest copper producer is withholding a $600 million in VAT refunds owed to mining firms and will only repay the cash when companies produce import certificates from destination countries, the minister of mines said in June.

Consultation with exporters

Finance Minister Alexander Chikwanda said in August it planned to waive the requirement because it is impractical. The Zambia Revenue Authority says it is still consulting with exporters before implementation.

Glencore said in a statement it was placing Sable Zinc Kabwe under ‘care and maintenance’ – which means operations are being halted – in response ‘to the current local economic environment in Zambia, as well as the cash flow restrictions caused by the withholding of around $12 million in VAT refunds’.

Curtailing expansion projects

Aside from the lay-offs, Glencore also said Sable was curtailing ‘all expansion capital projects’.

“Sable is working with affected employees to identify opportunities at other group companies in Zambia as well as with other operations in the Kabwe area,” it said.

Job cuts are a thorny issue in Zambia and the government of President Michael Satahas previously threatened to revoke the licenses of companies that have said they plan to trim headcount, reported Reuters.

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