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Zambia Mining Tax Increase Affects Fermentation First Quantum to Cut 2500 Persons

CLICK:192TIME:2018-12-28

First Quantum Minerals Ltd. plans to cut at least 2,500 jobs in Zambia on the grounds that the Zambian government has raised mining taxes. The layoffs will be phased out in the first quarter of 2019 and divided equally between Kansanshi and Solner mines.


Zambia is the second largest copper producer in Africa, and its mining companies have repeatedly warned that higher taxes will hurt the industry.


Zambia Chamber of Mines says more than half of the country's copper mines may not be profitable next year. First Quantum Mining has announced plans to cut production. The entinel mine is a response to the increase in mineral exploitation royalties.


The company said on Friday it would also cut an unknown number of contractors.


Last week, Zambia's largest industry lobby group said that more than half of Zambia's copper mines, Africa's second-largest producer of metals, could be unprofitable next year because of increased taxes on operators. In a statement to reporters Thursday in Lusaka, the capital, the Zambian Mining Association said that the effective tax rate would be between 86% and 105%, with 27,900 jobs at risk. Zambian legislators passed legislation this month to increase mining royalties on copper and cobalt, both key components of electric vehicles, as southern African countries try to control foreign borrowing and reduce budget deficits. Mining operators, including Glencore Plc and First Quantum Minerals Ltd., have warned Zambia's government through industry lobbying groups that they will reduce unemployment by more than 21,000 and capital expenditure by $500 million. Sokwani Chilembo, chief executive of the mining company, said by telephone that copper production would be flat next year and would begin to decline from 2020 as taxes increased. He said the industry group expects to produce 820,000 tons this year.


Copper accounts for more than 70% of Zambia's foreign exchange earnings.

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