Vedanta's Zambian business KCM imports semi-processed copper from Chile

* KCM imports 5,000 tonnes of concentrates

* Says relaxed VAT refund rules made imports viable

LUSAKA, June 3 (Reuters) - Vedanta Resources (Other OTC: VDNRF - news) ' Konkola Copper Mines (KCM) business in Zambia has imported its first semi-processed copper from Chile to ensure its Nchanga smelter operates at full capacity, it said on Wednesday.

KCM bought 5,000 tonnes of copper concentrates from Chilean state-run firm Codelco and will smelt the semi-processed material at the Nchanga smelter, which has an annual production capacity of 311,000 tonnes, KCM spokesman Shapi Shachinda said.

"The concentrates mineralogy is suitable for blending with KCM's own concentrates and other third-party concentrates," he told Reuters.

"Further Chilean imports will depend on the successful outcome of the trial run with the current imported concentrates," he added.

Zambia relaxed rules in February that had prevented $600 million in tax refunds being paid to mining firms such as Vedanta Resources and Glencore (Xetra: A1JAGV - news) .

The country's tussles with miners over value-added tax (VAT) as well as royalties have threatened investment and growth in one of Africa's most promising markets

Copper production in Zambia, Africa's second-largest producer of the metal, dropped to 708,000 tonnes in 2014 from 760,000 tonnes in 2013.

Shachinda said, with the changes in regulations over VAT refunds, it had once more become viable for KCM to purchase concentrates from other local and foreign mining companies and smelt them at its own facilities.

"This practice will not only help to fill up smelter capacity, but will also increase government revenues and sustain employment at the smelter," he said.

KCM has been blending its concentrates with those from other local mines and the Democratic Republic of Congo but these have not been enough to reach the Nchanga smelter's capacity, he said.

(Reporting by Chris Mfula; Editing by Pravin Char)