Zambia Royalty Disagreement. Halts $2 Billion of Copper Mine Projects
First Quantum, Lubambe Copper projects on hold: lobby group
Royalty is a double tax, making projects unviable: group
Bloomberg reports that Copper miners in Zambia have halted $2 billion of planned investments because a royalty tax introduced last year makes the projects unviable, according to an industry lobby group.
A plan by First Quantum Minerals Ltd. to invest $1 billion extending the life of its Kansanshi operation won’t proceed until the royalty is deductible from other corporate taxes, said Sokwani Chilembo, chief executive officer of the Zambia Chamber of Mines. The same goes for EMR Capital-backed Lubambe Copper Mine’s project to invest a similar amount in a new mining operation, he said.
“We need this royalty payment regime removed for progress to begin,” Chilembo said in an interview. “If the government thinking is otherwise, good luck.”
John Gladston, a spokesman for Vancouver-based First Quantum, declined to comment. Lubambe is “actively engaged” in discussions with the Zambian government about its planned extension project in the country, CEO Nick Bowen said in an emailed response to questions.
“The extension project can deliver enormous benefits for Zambia and its people,” he said. “The concessions needed are not material compared to the benefits to Zambia.”
Zambia’s uneasy relationship with mining investors has deteriorated over the past 12 months, with the government clashing with Glencore Plc over the Switzerland-based company’s plan to mothball Mopani Copper Mines’ operations. Zambia’s increasingly aggressive stance over the nation’s key export industry may partly reflect maneuvering by President Edgar Lungu as he struggles with economic challenges ahead of next year’s elections.