Barrick explores options for Zambian copper mine under pressure from taxes

[ZAMBIA] Barrick Gold Corp said on Monday that it was considering all options for Lumwana copper mine in Zambia as the country's proposed new mining taxes would make it challenging to generate adequate returns for all its stakeholders.

Barrick, which recently completed a US$6 billion deal to buy rival Randgold, said it is continuing to engage with the Zambian government to find a mutually beneficial solution for the operation of the mine in the wake of the new tax changes.

"Given the challenging conditions the mine was facing, all options would have to be considered," the company said in a statement.

But Barrick said the media reports about the sale of the business were untrue.

Zambia, Africa's second-largest copper producer, increased its sliding scale for royalties of 4 to 6 per cent by 1.5 percentage points from Jan 1 and introduced a new 10 per cent tax when the price of copper exceeds US$7,500 per tonne.

"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 US$3.3 billion it has already made to the Zambian economy over the past 10 years," Barrick's chief operating officer for Africa and the Middle East, Willem Jacobs, said in a statement.

Barrick has announced plans to sell a variety of non-core assets and cut costs following its acquisition of Randgold.

"Lumwana has made detailed proposals to the Government about a partnership approach which would provide the State with an improved share in the economics of Lumwana without overburdening the mine," Mr Jacobs said.

Barrick already works to end a nearly two-year-long tax dispute in Tanzania that has effectively shuttered operations there and forced it to consider options for its stake in Acacia Mining PLC, including a possible sale.

REUTERS