UPDATE 1-Zambia mines minister says mining royalty hike will remain

Tue Dec 30, 2014 1:50pm EST
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(Adds Barrick comment)

By Chris Mfula

LUSAKA Dec 30 (Reuters) - Zambia will hike royalty rates on open pit and underground mining beginning on Thursday, the country's mines minister said on Tuesday, despite industry concerns of shaft closures and up to 12,000 in job losses.

The decision to increase royalties for open pit mines to 20 percent from 6 percent and those for underground mines to 8 percent from 6 percent has rattled unions and miners and there had been hopes that the government would soften its stance.

But Mines Minister Christopher Yaluma said on Tuesday the government would implement the new royalties system as is when it comes into effect on Jan. 1 because it was in the best interest of the country, Africa's second-largest copper producer.

"It will be negligent of the government to undo what we did. We applied our minds when coming up with the new rates and can't just change because of an outcry," Yaluma told Reuters.

He added that mining companies should come up with clear models showing how their businesses would be hit by the royalties for the government to consider any revision.

Zambia's Chamber of Mines said this month the new royalties would result in shaft closures and 12,000 jobs losses, and may make a number of other operations economically not viable.

The plan has already prompted Toronto-based Barrick Gold Corp. to say it will suspend operations at its Lumwana Copper Mine, which supports nearly 4,000 direct jobs in the area.   Continued...