Monday, October 07, 2013

FQM urges govt to guarantee tax stability
By Gift Chanda in Solwezi
Mon 09 Sep. 2013, 14:00 CAT

CANADA'S First Quantum Minerals has urged the government to guarantee tax stability in the mining sector.

The call comes as the government starts preparing the 2014 national budget, which analysts say may see significant tax increments to help the PF government finance its ambitious infrastructure projects and to seal the widening budget deficit.

"If taxation is stable and we know we are going through the next five or 10 years without changes it would be nice," Tristan Pascall, an assistant general manager at FQM's Kalumbila Mining Limited, said in an interview.

"What is important is that we can see the future. If things keep changing every week then we can't see the future."

He said FQM had had discussions with the government concerning deals to guarantee policy stability.

"We are very happy with the encouragement the government provides to investments but what we need is stable taxation. That is the number one thing we need," Pascall said.

"Once stability is guaranteed, then people can make investment decisions because then we can compare Zambia to Peru or Peru to Australia or Australia to Canada or Zambia to South Africa. But if you keep changing, then it becomes so hard."

He said taxation was already heavy in Zambia.
The government in 2011 doubled mineral royalty taxes to six per cent as it sought more benefits from the country's mineral wealth.

"If the royalty taxes change upwards, it is going to impact us," Pascall said.

On the 10 per cent levy on the export of ore and concentrates, he urged the government to waive it, saying it threatened the Enterprise and Sentinel operations.

Zambia, Africa's biggest copper producer, introduced a 10 per cent levy on the export of ore and concentrates in November 2011 to increase local value addition to mineral products.

The government waived the levy for the export of manganese ore and concentrate in February last year.

"We are currently building a smelter at Kansanshi but if the Sentinel operation commences before the smelter is complete, then we are going to have a problem. We are going to be jammed with concentrates and we will not be able to export if that 10 per cent levy still stands," Pascall said.

First Quantum has a 75,000 tonnes stockpile of copper concentrate worth US$133 million at its Kansanshi mine, about 10 kilometres north of Solwezi, Pascall said, adding that capacity to smelt it was lacking due to increased production.

FQM is also developing the Sentinel copper project, which is the first of the three potential mines at the new large-scale project in North-Western province.

Its second mine to be developed will be the Enterprise operation, which will be the only nickel producer in the country after Albidon Limited halted operations at its Munali mine in December last year.

The Enterprise will produce 38,000 metric tonnes of the stainless steel raw material annually in its first phase and output will be ramped up to 60,000 tonnes in the second phase.

There are currently no nickel smelters in Zambia.

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