Zambia cuts mining royalties once again

Barrick halts Lumwana mine in Zambia after tax hike

Barrick Gold's Lumwana, located in Zambia's Northwestern Province. (Image courtesy of Barrick Gold)

Zambia has had to climb down for a second time on a royalty regime first announced last year.

In December, the country increased mining royalties on open pits from 6% to 20% starting January 1. The royalty rates on underground operations were also to be hiked from 6% to 9%.

That led some miners like Barrick Gold which owns the massive Lumwana mine in the country to say it had "no choice" but to phase out operations at its open pit mine.

After Zambian President Edgar Lungu then ordered a rejig, the rate for both types of operations were set at 9% in April.

Reuters reports on Friday that underground operations will be cut again to 6%. Opencast mines will still attract royalties of 9%.

Zambia is the world's eighth largest copper producer with output of 730,000 tonnes last year. It accounts for more than three-quarters of the value of the African nation's exports.

Copper was last trading at $2.70 a pound in New York, down 11.8% over the past year.