"[It] would imperil [Lumwana's] ability to sustain returns to all stakeholders"

Barrick seeking solution for Lumwana in light of Zambian tax changes

Staff reporter
Barrick seeking solution for Lumwana in light of Zambian tax changes

Barrick seeking solution for Lumwana in light of Zambian tax changes

The enlarged miner, which completed its merger with Randgold Resources on January 1, said it had made detailed proposals to the government about a partnership approach, to provide the state with an improved share in the economics without overburdening the mine.

Asset sales are among Barrick's top priorities, although new CEO Mark Bristow has said he was keen to improve Lumwana.
Barrick's chief operating officer for Africa and the Middle East Willem Jacobs said finding a "win-win solution" between the industry and government would increase investor confidence in Zambia and safeguard the long-term prospects of its mining industry.

Zambia's changes proposed in its 2019 budget came into effect on January 1 and include royalty rate increases and a new 10% charge if the copper price rises above US$7,500 per tonne. Copper is currently worth around $6,000/t.

"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," Jacobs said.

Lumwana produced 224 million pounds of copper in 2018 - more than half of Barrick's total 383Mlb, according to preliminary results released yesterday.

Zambia's Chamber of Mines has warned of thousands of jobs were at risk due to the tax changes and First Quantum Minerals (TSX: FM) recently flagged up to 2,500 lay-offs at its Kansanshi and Sentinel mines this quarter, plus an unspecified number of contractors.

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