Zambia’s Chamber of Mines, the body that represents mining companies operating in the country, has said that the government’s decision to hike royalty rates on open pit mining from 6 percent to 20 percent will lead to shaft closures and 12,000 job losses, according to a Reuters report on Friday.
Canadian mining giant, Barrick Gold Corp, said on Thursday it had begun the processed of suspending operations at its Lumwana copper mine because of the passage of the new tax law which is to kick in on January 1.
The tax plan eliminates corporate income tax, but imposes a 20 percent gross royalty on revenue without considering profitability. The chamber said the suspension of Barrick’s Lumwana operation also expected hit output at three copper smelters which depend on metals from the mine. Lumwana produced around 118,000 tonnes of copper in 2013, according to Reuters. “The imminent implementation of the 2015 budget measures may make a number of other operations economically unviable, potentially leading to more mine closures,” said the chamber, quoted by the news agency.
“We are not getting sufficient proceeds from our mineral resource and we felt we would only be able to do so by hiking the royalties to the current levels,” Yaluma told Reuters. “They are crying that this is too much but too much is a relative term,” he said.
The chamber said Mopani Copper Mines, owned by Glencore, and Canadian firm First Quantum Minerals both have big copper projects that could now be at risk. Other mining companies operating in Zambia include Vedanta Resources and Vale.
