Paladin’s Fission Uranium takeover delayed by Canada security review
The takeover has faced several hurdles, including a delayed shareholder vote in August and opposition from Fission’s largest investor.
Kansanshi began production in 2005 and is the eighth largest copper mine in the world, as well as Zambia’s biggest.
Canada’s First Quantum Mineral (TSX:FM), Zambia’s largest foreign investor, said Tuesday that the country’s decision to raise mining royalties from 2015 would discourage future endeavours and cost jobs.
The African nation, the continent’s second-largest copper producer, will increase the royalties for open pit copper mines from 6% to 20% and to 8% for underground mines beginning January 2015, Finance Minister Alexander Chikwanda said in the 2015 Budget speech.
First Quantum Minerals’ Zambia government affairs manager, John Gladston, told Reuters that the new tax system would “inevitably” lead to fewer new jobs and dissuade entrepreneurs from investing in the country.
The Canadian miner had already delayed investment projects worth $1.5 billion in Zambia due to uncertainty over the fiscal regime.
The increased royalties come at a time when the Zambian Government and copper mining firms are in disputes over tax refunds.
The government is holding back $600m of VAT repayments on exports, seeking the copper mining companies to produce certificates from the importing countries. This action has forced major copper mining firms such as Glencore and First Quantum to halt or postpone multi-million dollar projects in the country.
First Quantum is not the only company stepping up pressure on the Zambian government. Earlier this month Glencore (LON:GLEN) idled operations at its zinc mine and cancelled over $800 millions worth of copper projects in the country.
Image courtesy of First Quantum.
10 Comments
Ben Robinson
Zambia has the resources. Resources have value. Next. Self development. Canadians can return to Canada.
Shane Freeman
Just like ZCCM hey?
miket
Or step across the border and make those investments in the DRC…….
Homer
Don’t worry, we will!
realist
Yeah Ben like you did before lost $ 1m per day haha
Chapita
These guys should just the maths properly for which I think the new tax rates are far much better and everybody wins
Ben Robinson
Countries with resources are not going to be on the losing end. You cannot stop a sovereign country from developing its own industry with its own resources. These are not cabbages. The ores can stay in the ground another 50’years +
Scott
No one is stopping Zambia from developing their own resources, they’re unable to do it themselves. Unless they can magically conjure up the required expertise to develop these deposits, countries like Zambia will continue to rely on foreign companies to do so for them. Allowing them in, then changing the goalposts once in is not going to encourage further development, which means no tax revenue for the country, no benefit from the minerals in the ground, and no improvement in the country. So saying it’s ok for this ore to remain in the ground for another 50 years is the same as saying it’s ok for Zambia to not develop and people to remain in poverty for another 50 years.
Not sure that’s the best solution for anyone.
Firdaus Abbasi
Amazing that in the 21st Century Ben argues the mid-20th Century arguments that left Africa hobbled and limping for the last 50 years. African politicians were to be found to beg with aid bowls in the capitals of U.S.A, Europe Australia, & Canada. The African political cadres abandoned their nationals and bought palaces and manors in Europe (They are still here for those with open eyes to see – Obianga, Bokassa, Idi Amin, Kenyatta, Mobutu are but a few)
Many nations learnt from this sorry time and thus subscribed to the World Bank backed mining laws that provided macroeconomic, tax and regulatory stability. It has attracted FDI and resulted in better national education and better healthcare especially around the mining areas. Despite this, 40% of the government “revenue” is aid, mainly from OECD! Zambia relies 44% of it’s budget on aid (http://www.lusakatimes.com/2013/08/27/zambias-dependence-on-external-aid-reduces-to-5-of-national-budget-chikwanda/ & http://www.theguardian.com/global-development/poverty-matters/2011/sep/13/fresh-narrative-on-aid-dependence)
Keep copper in the ground (as some suggest hereunder) for the next 50 years, and ceramics technology and fibre glass technology will make copper (for a start) redundant. And before that, Mongolia, Afghanistan, South America (which is FQM’s new focus) will attract investments causing Africa much damage. Ask Tanzanians (between 1970’s & 1990) and look at it now. As for DRC …. yes FQM left with settlement under International Arbitration … and I guess without any regrets. Frontier Mine and Lonshi are a testament to the sorry state. To look at DRC is not a standard for good economic policy! Chinese have not been great bedfellows in the main …. African Miners from South Africa or Nigeria have yet to be seen touting for sub-saharan projects.. ??? !!!!
Dylan E McFarlane
Simple – produce certificates from importing countries. Should be easy for a large, multinational company that is both mining and trading the metal. Seems the transparency initiatives are failing.