Barrick explores sale of Zambian copper mine

TORONTO Barrick Gold Corp. says it’s exploring all options including the possible sale of its Lumwana mine in Zambia as the government considers increased taxes.

While acknowledging that the government is under pressure to increase revenue, company chief operating officer Willem Jacobs said the changes would hit the mine’s profitability.

“The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders,” he said in a statement Monday.

Barrick said it continues to engage with Zambia about ways forward for the operation, including a potential partnership approach with an increased stake for the government in the mine’s economic performance.

Lumwana produced 256 million pounds of copper in 2017 and had a carrying value of US$849 million that year.

Toronto-headquartered Barrick said reports that it has already sold the mine were untrue, but that all options need to be considered given the conditions the mine faces. “Given the challenging conditions the mine was facing, all options would have to be considered,” the company said in a statement.

First Quantum Minerals Ltd., which operates the Kansanshi and Sentinel copper mines in Zambia, said last September that it faces increased tax rates and reduced deductions that would add about 1.8 per cent to its all-in sustaining costs in the country.

Zambia, Africa’s second-largest copper producer, increased its sliding scale for royalties of four to six per cent by 1.5 percentage points from Jan. 1 and introduced a new 10-per-cent tax when the price of copper exceeds US$7,500 per tonne.

Barrick, which completed its takeover of Africa-focused Randgold Resources at the start of the year, said it plans to divest some assets as part of the deal.