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UPDATE 1-Zambia's 2015 copper output up despite power woes, weak prices

Published 2016-01-22, 07:10 a/m
© Reuters.  UPDATE 1-Zambia's 2015 copper output up despite power woes, weak prices
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LUSAKA, Jan 22 (Reuters) - Zambia's copper production inched
higher to 711,515 tonnes in 2015 from 708,000 tonnes the
previous year mainly due to a new mine owned by Canada's First
Quantum Minerals FM.TO , the Chamber of Mines said on Friday.
An electricity shortage and weaker copper prices due to
slower growth by top consumer China have piling pressure on
Zambia's mining industry, threatening output, jobs and economic
growth in the southern African nation, and put its currency on
the back foot against the dollar.
The government of Africa's second-largest producer of the
metal forecast that 2015 output - at mines owned by foreign
firms such as Glencore GLEN.L , Barrick Gold Corp ABX.TO and
Vedanta Resources VED.L - would drop to around 600,000 tonnes.
Some mining companies such as Glencore and Vedanta laid off
workers and closed certain operations to curb copper output in a
bid to support flagging prices.
Zambia's policy flip-flops on royalty taxes during the year
also caused concern among mining firms, forcing them to
suspended major capital investment in mines or new projects.
"The ... increase is mainly on account of the 32,952 tonnes
of copper that Kalumbila Minerals contributed when it begun its
ramp-up in February," Zambia Chamber of Mines economist Shula
Jalasi-Shula said, referring to First Quantum's mine.
Zambia's decision to increase royalties for open pit mines
to 20 percent from 6 percent and those for underground mines to
8 percent from 6 percent in January 2015 met with an outcry from
unions and producers, forcing the government to review the plan.
Zambia then set the royalty tax rate for open cast and
underground mining at 9 percent in April, rowing back from
earlier plans to charge as much as 20 percent.
However, a government spokesman said in December Zambia
would introduce a variable tax on mineral royalties that will be
adjusted according to metal prices.

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