First Quantum Minerals (FQM) has announced that some 2,500 miners will lose their jobs, with layoffs starting next month, due to the proposed new mining tax regime.
FQM’s lay-offs will affect 1,250 direct employees at the company’s Kansanshi Mine in Solwezi and a further 1,250 at its Sentinel Mine at Kalumbila.
Both local and expatriate staff across all departments will be impacted and employees will receive redundancy pay in line with statutory requirements.
FQM says the difficult and sad decision to make lay-offs originates from the government’s 2019 Budget, which includes an additional 1.5 percentage point increase on all mineral royalty tax bands.
And there is an additional two royalty bands of 8.5 and 10 percent when the copper price exceeds US$7,500 and US$9000 per tonne respectively.
Critically, mineral royalties will cease to be deductible from corporate income tax; a measure not seen in other copper mining jurisdictions.
Other measures include the introduction of a yet to be quantified sales tax to replace VAT, meaning companies cannot reclaim tax on input purchases.
It is thought this measure will be most damaging to local Zambian mine suppliers.
In 2017, First Quantum produced 573,963 tonnes of copper, 199,736 ounces of gold and 17,837 tonnes of nickel.
In Zambia it operates the Kansanshi mine – the largest copper mine in Africa – and smelter and the Sentinel mine in Kalumbila.