Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
Gold giant Barrick (TSX:ABX)(NYSE:GOLD) said Monday that while it continues to engage with the Zambian government and community stakeholders about a mutually-beneficial way forward for its Lumwana copper mine, it would consider selling the operation given the “challenging conditions” it’s facing.
Barrick 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 sector.
Following the first Lumwana board meeting after the merger with Randgold, Barrick’s chief operating officer for Africa and the Middle East, Willem Jacobs, said the company understood the Zambian government was under pressure to increase its revenue. But he noted the planned tax changes would put Lumwana in a difficult situation.
“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 in the statement.
Zambia, Africa’s second-largest copper producer, increased this year its sliding scale for royalties of 4% to 6% by 1.5 percentage points, and introduced a new 10% tax when the price of copper exceeds $7,500 per tonne.
The nation also plans to replace value-added tax with a sales tax by April to help bring down mounting public debt.
Mining accounts for more than 70% of Zambia’s foreign-exchange earnings. Other than Barrick, companies operating in the southern African nation include Glencore, Vedanta Resources and First Quantum. The latter warned last month it would have to lay off 2,500 workers at its local mines because of the taxes and royalties change.
4 Comments
allritejack
Zambia is just another failed African state held together by Offshore mining companies, which they attempt to bleed white as they have no idea how to make an economy work on their own. South Africa is the same except they still have 5 million Whites supporting the economy. They plan to get rid of them & join the failed state league; which they much prefer to having Whites succeed in their endeavours.
allritejack
It’s not about being racist its about accepting reality. No one can honestly look at European history & African history & not see a difference. Or look at the whole continent which has nothing comparable to South Korea which was in the same condition 50 years ago & is now a very successful country. Not accepting reality creates enormous problems. Instead of working at solutions Africa will forever be blaming colonialism for its failures, even though that’s what created infrastructure throughout the continent. Surely you can see what transpired in Zimbabwe? You ought also to see that South Africa is tending to follow the same path, which I happen to be believe is inevitable eventually.
jahgh
Humanity keeps taking advantage of each other. While Africa is poor, Europeans and Americans are some of the most highly indebted people. For Europe and USA to maintain their class as first world countries, they have to keep others under them. The current economic system can not and does not allow all countries to be at the same level. The problem with humanity is evil in human hearts that manifests in different forms including laziness, negligence, imperialism, greediness etc. We cant judge others (Africa) and condemn colonialists. The issues are both internal and external.
Bots Tony Moeng
The economy of the world will never be the same at all as other are more advanced than others based on their long term economical stability of their countries that never suffered any extended interference by the colonizers