According to an announcement made today, the Canadian mining group First Quantum is planning to invest more than $4 billion in Zambia over the 2-3 years in a new mine and expanded operations.
A report published by Reuters quoted Adam Little, head of tax at First Quantum Minerals, who said that more than half of this investment would be dedicated to improving the Kansanshi copper and gold mine, while the rest would dedicated to brining the new Trident mine online.
Executives of First Quantum appear to making such an investment contingent upon some guarantees against political risk with the government of President Michael Sata, who in the past has made remarks leaning toward “resource nationalism.”
“It would be nice and would help us with our investment if we could have some assurance for maybe 15 years that the tax rates would be as you see them now,” Mr. Little told Reuters on a visit to Zambia. “We at First Quantum and probably the industry as a whole would prefer the mineral royalty tax to be at a lower level, in the 3 to 4 percent range.”
The announcement from First Quantum comes amidst a period of uncertainty for mining companies, as a Chinese mine has threatened to shut down over licensing disputes, debate over new laws to ban the export of raw copper, frequently changing ministers of mining, and proposals to increase state ownership in all mining projects. In response to these measures, the Economist Intelligence Unit recently issued a warning of increased political risk in Zambia.
Against these trends, First Quantum’s announcement of this large investment is seen as a vote of confidence for continued stability in Zambia.