Canadian metals and mining firm First Quantum Minerals is reportedly planning to cut more than 1,000 jobs at the Kalumbila copper-nickel mine located in Zambia.
Quoting Zambia Labour Minister Joyce Simukoko, Reuters reported that the company is looking to enforce the cuts next month when the government’s proposed tax hikes will come into force.
The management at Kalumbila mine has reportedly written to the minister’s office last week disclosing its intention to lay off workers.
Simukoko was quoted by the news agency as saying: “We received the letter last week informing us that they want to lay off more than 1,000 workers starting in January, but we think these are arm-twisting tactics.”
The development comes after the Chamber of Mines warned last week that mining companies operating in Zambia may cut more than 21,000 jobs due to reduced capital expenditure over the next three years if higher taxes are levied on the firms.
Zambia intends to raise taxes and increase royalties to garner greater revenues from the companies in the country in an effort to reduce mounting debt.
The planned tax changes as envisaged in the government’s 2019 budget include the introduction of new mining duties and replacement of value-added tax with sales tax. The measures also include capital expenditure cutbacks of more than $500m.
Under the new mining tax regime, the government will increase mineral royalty rates by 1.5%.
Simukoko added: “They should explore other areas where they can cut cost because, as far as we are concerned, redundancies should only come in as a last resort.”
Zambia Finance Ministry is pushing ahead with the implementation of the new taxes in January.
The African nation is a major copper producer and receives more than 70% of its foreign exchange earnings from the mining industry.
Major firms holding interests in mines located in the country include First Quantum Minerals, Barrick Gold, Glencore, and Vedanta Resources.