(Minews) - Copper output in Zambia, Africa’s second-biggest producer of the metal, fell to a three-year low in 2014, just as the implementation of a contested new mining tax threatens a further drop, according to the mines chamber.
Preliminary figures show production declined to 708,258 metric tons, the mines ministry said in an e-mail. That’s the lowest since 2011, Jackson Sikamo, president at the Zambia Chamber of Mines, said by phone on Friday. The country produced 790,007 tons in 2013.
A new system that increases royalties for mines while removing corporate income tax, may cut copper output by more than 158,000 tons this year, the chamber said in December. This may be offset by First Quantum Minerals Ltd.’s Sentinel mine, which started up in December and is forecast to produce 150,000 tons to 200,000 tons in 2015.
Barrick Gold Corp. in December started a process to put its Lumwana mine under care and maintenance, where production is halted while the site is kept ready for a potential restart, because of the new tax regime and lower prices.
A major contributor to the 2014 output decline was a conveyor collapse at Lumwana, Sikamo said.
“For this year, for us it’s a bit difficult” to predict total copper production as operators are in talks with the government over the new tax system, he said. “It will all depend on the outcome of our discussions.”
Edgar Lungu, sworn in last month as Zambian president, told Finance Minister Alexander Chikwanda and the revenue authority to speak with mine owners over the disputed new royalties and the more-than $600 million in value-added tax the government is withholding from copper exporters.
“The ultimate aim is to protect jobs and keep mines profitable at the same time,” Lungu said Feb. 3. “We must also maintain the country’s right to collect due taxes.”
The new tax system, which increases royalties for open-pit mines to 20 percent from 6 percent and to 8 percent for underground operations, will remain, the state-owned Zambia Daily Mail reported on Friday, citing Chikwanda. The Democratic Republic of Congo overtook Zambia as the continent’s biggest copper producer in 2013.
