Barrick Gold weighs options for Lumwana copper mine in Zambia

22 January 2019 (Last Updated June 5th, 2020 12:04)

Barrick Gold is weighing all options regarding the future of its Lumwana copper mine in Zambia in the wake of proposed changes to the tax regime.

Barrick Gold weighs options for Lumwana copper mine in Zambia
Zambia is Africa’s leading copper producer. Credit: Joanna Kosinska on Unsplash

Barrick Gold is weighing all options regarding the future of its Lumwana copper mine in Zambia in the wake of proposed changes to the tax regime.

The company stated that it is continuing to engage with the Government of Zambia and community stakeholders for a “mutually beneficial way forward for the operation” of the copper mine.

Barrick Gold stated: “Given the challenging conditions the mine was facing, all options would have to be considered.”

Barrick chief operating officer for Africa and the Middle East Willem Jacobs said: “The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders, such as the significant contribution of more than $3.3 billion it has already made to the Zambian economy over the past 10 years.”

The company made proposals to the government about a partnership approach that would offer the state an improved share in the mine’s economics without overburdening the property.

Jacobs added: “Finding a win-win solution between the industry and government would without doubt increase investor confidence in Zambia and safeguard the long-term prospects of its mining industry.”

Jacobs also clarified that media reports featuring Barrick had sold Lumwana were untrue.

In September 2018, Africa’s leading copper producer, which is struggling with mounting debt, included in its annual budget a plan to increase mineral royalty rates by 1.5% from this year.

“The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders.”

The budget also featured a fourth tier rate at 10% if the copper price touches more than $7,500 per tonne, and made minerals royalties non-deductible for tax purposes. It also plans to replace value-added tax with sales tax by April.

In December 2018, the Chamber of Mines stated that due to the new framework, over 58% of the copper producers in the country would run into losses at current prices, which would put 27,900 jobs at risk, but individual companies have failed to support this claim.

Mining contributes to over 70% of the country’s foreign-exchange earnings.

Barrick is also working to end a tax dispute in Tanzania that has lasted for almost two years. The dispute has impacted the company’s operations in the country, compelling it to explore options for its stake in Acacia Mining.