Zambia's state power company made the decision amid an ongoing dispute over the implementation of new electricity tariffs in the country.
First Quantum Mining News
Cobre Panama project is now 50% complete and on track to produce 320,000 tonnes of copper in 2019, making the company one of the world’s top six producers of the red metal.
African gold miner comes out on top.
So far, copper prices have failed to react significantly to news of supply disruptions, remaining more responsive to news from China, the world’s largest consumer.
The Vancouver-based miner aims to produce 280,000 to 300,000 tonnes of the red metal a year, but commercial levels won't be reached until state power utility Zesco finish connecting the mine to the power grid.
Power restrictions could hit output of most copper mines operating in the country.
The Chamber of Mines wants the government to reconsider its decision to hike corporate income tax rate on mineral processing from 30% to 35%, which came in effect July 1.
The move puts an end to a nearly nine-month standoff that has hit output and profits in Africa’s second largest copper producer.
The country's national pension fund has bought 15.9 million shares of Zambia's Consolidated Copper Mines-Investment Holdings for almost $80 million.
Mines minister Christopher Yaluma said reducing royalties below the recently revised 9% would make underground mining more cost effective.
The announced changes will be effective on July 1, once parliament has approved them.
The government intends to set its mining royalties at 9% for both open-pit and underground mines.
Government claims it was not notified according to the law.
But the fund warned that only further tightening of fiscal and monetary polices would contain the country's large deficits.
The new rules only apply to future payments and not amounts already owed.
Newly elected President Edgar Lungu wants to keep mining royalties at 20%, as opposed to the 6% companies were paying a month ago.
The situation may soon change, as authorities have began talks with the country’s top miners, signalling the possibility of a compromise over the country’s new tax regime.
Copper tumbled Wednesday to fresh six-year lows, dipping below $5,500 a tonne. Stocks in miners of the industrial metal are getting hammered.
The miner believes that while the market is oversupplied now it will tighten from 2018.
Despite the government announcement Tuesday that it will push ahead with plans to more than triple mining royalties.
Move will leave up to 12,000 jobless and it is likely to sour the already fractious relationship between the government and mining companies.
The miner, Zambia's largest foreign investor, operates Kansanshi mine, the eighth largest copper mine in the world, as well as the country's biggest.
Underground mining royalties will go up from 6% to 8%; underground taxes now 20%.
Zambia’s mines minister says the company has not officially communicated the government its intentions as required under the country's law.
The company is cutting 169 jobs at the mine.