Government Sends Team to Investigate FQM Job Cuts

Following a series of high profile mine operation suspensions and job cuts the PF government has sent a delegation to North-Western Province in order to investigate First Quantum Minerals (FQM) job cuts at Kansanshi and Kalumbila mines.

The PF delegation included Labour Permanent Secretary Barnaby Mulenga and his mining counterpart Paul Chanda. Whilst meeting with the North-Western Province Permanent Secretary Ephraim Mateyo today, Barnaby Mulenga noted that the team was in Solwezi to establish the main reasons behind the job cuts.

FQM announced in December that 2,500 miners would lose their jobs due to the PF’s new tax regime. The lay-offs have affected 1,250 direct employees at the Kansanshi Mine in Solwezi and a further 1,250 at sentinel Mine in Kalumbila. Both local and international staff were affected.

At the time of their decision FQM noted it was with great difficulty and sadness that they had to make such lay-offs, which were solely due to higher taxation rates - An additional 1.5 percentage point increase on all mineral royalty tax bands, and 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 a bid to appease the mining sector and local communities, Mr Meteyo noted that the PF are a ‘caring government’ and want to strike a balance between investors and the local people.