LUSAKA – Zambia’s government filed notification of plans to take over Vedanta Resources’s domestic copper assets, President Edgar Lungu said.

The move marks an escalation in tension between the government and mine owners, after Lungu last week threatened to “divorce” Vedanta and Glencore, two of the biggest employers in Africa’s second-largest copper producer. Relations have been simmering after the state earlier this year increased royalties and unveiled a plan to overhaul the value-added tax system.

Lungu mainly targeted Konkola Copper Mines, Vedanta’s local unit, in a weekend visit to Zambia’s Copperbelt province, where some companies are cutting production and firing workers.

“There should be no question about our resolve to divorce starting with KCM,” Lungu said in comments broadcast on state TV on Sunday. “We have filed that notification.”

A Konkola spokesman wasn’t able to comment immediately and Vedanta didn’t respond to an email seeking comment.

TAX SYSTEM
The Zambian government has for years accused mining companies of not paying enough tax. The state has struggled to settle on a taxation system for the industry, having made ten changes in the past 16 years.

This year’s royalty increases have come as Lungu’s government seeks cash to settle a surging foreign-debt bill. Servicing external loans has already caused Zambia’s foreign reserves to drop to a decade low, while its currency has fallen by more than 14% against the dollar this year, making it the worst performer globally after Argentina’s peso.

Lungu said the government would comply with the law in taking over Vedanta’s assets, and that other investors were keen to operate them. His spokesman, Amos Chanda, declined to identify the companies.

Glencore must hand over to local contractors two copper shafts it plans to close, Mines Minister Richard Musukwa said in comments broadcast over the internet at the weekend.