April 6, 2016 / 1:07 PM / in 2 years

Zambian government in talks with mining firms over power prices

LUSAKA, April 6 (Reuters) - Zambia’s government is talking to mining companies to try to resolve a dispute about higher electricity prices introduced at the start of the year, an industry official said on Wednesday.

Zambia increased the price of electricity for miners by 26 percent on Jan. 1 as part of a bid by Africa’s second biggest copper producer to attract more investment in power generation.

But the increase has been disputed by miners in Zambia - which include Glencore, Canada’s First Quantum Minerals , Vedanta Resources and Barrick Gold - as they are already grappling with a slump in commodity prices.

The ministry of energy had told mining companies they would have to pay 10.35 U.S. cents per kilowatt hour from Jan. 1, up from 8.20 cents per kilowatt hour previously.

Copperbelt Energy Corp. Managing Director Owen Silavwe told reporters the mining companies were still paying the old tariffs while talks with the government continued.

Copperbelt Energy is the main power supplier to mines in Zambia and buys most of the electricity from state power firm Zesco Ltd.

“The government is talking to the mining companies and all other stakeholders, including ourselves. Hopefully agreement will be reached soon,” Silavwe said, without giving a timeframe.

The World Bank has recommended Zambia charge mining companies higher electricity tariffs to attract investment in power generation. (Reporting by Chris Mfula; editing by Ed Stoddard and David Clarke)

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