Zambia tells Glencore mine closure, lay-offs ‘illegal’

Zambia tells Glencore mine closure, lay-offs ‘illegal’

Zambia is Africa's second largest copper producer.  (Image courtesy of Konkola Coper Mines)

Glencore’s (LON:GLEN) zinc operations in Zambia came under attack Monday as the country’s mines minister said the company’s plans to idle operations at its Sable Zinc Kabwe and lay off- close to 170 workers are "illegal."

The world’s third-largest miner by market value announced its intentions last week, saying the measure was a direct consequence of “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."

Zambia tells Glencore mine closure, lay-offs ‘illegal’

Zambia’s mines minister Christopher Yaluma. (Image via YouTube)

But Zambia’s mines minister Christopher Yaluma told Reuters that Glencore had not officially communicated the government its intentions as required under Zambian law and that, therefore, they were "illegal."

The African nation, which last year lost its position as Africa's top copper miner to Congo for the first time since 1998, has been withholding $600 million in VAT refunds owed to mining firms, after companies failed to produce import certificates from destination countries.

The country, which began enforcing the rule last year in order to curb tax avoidance said in August it had decided to relax the rule because it proved very hard to implement, mainly because it involved documentation from importers outside the country's jurisdiction.

However the government is still withholding millions in VAT refunds owed to miners, including Barrick Gold (TSX, NYSE:ABX), Vale (NYSE:VALE), and Vedanta Resources (LON:VED).