February 23, 2015 / 8:04 AM / 3 years ago

UPDATE 4-Zambia's president vows to prevent job losses at Barrick mine

* More than 2,000 workers strike at copper mine

* Revenue authority relaxes tax refund rules

* Zambia trying to end rows over royalties, taxes (Adds Barrick comment)

By Chris Mfula

LUSAKA, Feb 23 (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 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.

Barrick co-president Kelvin Dushnisky said on Monday the company does not expect Zambia to take aggressive steps against Barrick to keep the mine open. Dushnisky met with Lungu in Zambia last week.

Dushnisky, speaking at a mining conference in Florida, said he was hopeful the two sides will find a solution in coming weeks. But if not, would suspend operations at Lumwana.

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 Lumwana 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. (Writing by James Macharia and Ed Stoddard; Additional reporting by Nicole Mordant in Vancouver; editing by Susan Thomas and Andrew Hay)

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