FIRST Quantum Minerals (FQM) chairman Philip Pascall

FQM calls for stable mine tax regime

FIRST Quantum Minerals says Zambia needs to come up with a stable tax regime that will encourage mining investments and exploration as the country faces prospects of falling ore grades.

Matt Pascal, First Quantum’s director of operations, said Zambia faced falling ore grades compared with the Democratic Republic of Congo – Africa’s top copper producer – and needed to come up with a stable tax regime that would encourage mining exploration and discovery of new ore bodies.

“Zambia has a great mining future. However, it does face the prospect of lower grade deposits. It needs a lot of explorations to discover new ore bodies,” Pascal said at the mining and energy conference held in Lusaka last week.

“We don’t have the grades in Zambia that one has in the Congo, so it does make it much more difficult hence the reason, even more, for a stable environment to get out there and do the necessary explorations.”

He was hopeful that the government and mining firms would settle on a tax regime that would encourage investment in the country.

Pascal said although it was “disconcerting” that there had been many changes to Zambia’s mining taxes over the last five years, it was good that the government had expressed willingness to talk to the industry to come up with a rational tax regime that would be conducive for further investment and sustainability of the mining industry.

“Dialogue has started and we hope it reaches a conclusion suitable for all parties,” he said.

First Quantum last year postponed US$1 billion worth of investments in Zambia due to a tax dispute with the government.

“As it stands at the moment, those projects are still on hold. That is the smelter expansion at Kansanshi and the sulphide expansion at Kansanshi. It is not closed out. At some point, we will review that as things develop,” Pascal said.

On copper prices, Pascal said the fall in international prices presents a challenge to profitability of mining operations.

“With lower copper prices, to remain profitable, one has to do everything possible to reduce the costs. Fortunately, we have seen drops in inputs like fuel,” said Pascal, adding that the situation had mitigated the impact the depressed copper prices would have caused.

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