UPDATE 1-Zambia's 2015 copper output up despite power woes, weak prices

Fri Jan 22, 2016 7:10am EST
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LUSAKA Jan 22 (Reuters) - Zambia's copper production inched higher to 711,515 tonnes in 2015 from 708,000 tonnes the previous year mainly due to a new mine owned by Canada's First Quantum Minerals, the Chamber of Mines said on Friday.

An electricity shortage and weaker copper prices due to slower growth by top consumer China have piling pressure on Zambia's mining industry, threatening output, jobs and economic growth in the southern African nation, and put its currency on the back foot against the dollar.

The government of Africa's second-largest producer of the metal forecast that 2015 output - at mines owned by foreign firms such as Glencore, Barrick Gold Corp and Vedanta Resources - would drop to around 600,000 tonnes.

Some mining companies such as Glencore and Vedanta laid off workers and closed certain operations to curb copper output in a bid to support flagging prices.

Zambia's policy flip-flops on royalty taxes during the year also caused concern among mining firms, forcing them to suspended major capital investment in mines or new projects.

"The ... increase is mainly on account of the 32,952 tonnes of copper that Kalumbila Minerals contributed when it begun its ramp-up in February," Zambia Chamber of Mines economist Shula Jalasi-Shula said, referring to First Quantum's mine.

Zambia's 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 in January 2015 met with an outcry from unions and producers, forcing the government to review the plan.

Zambia then set the royalty tax rate for open cast and underground mining at 9 percent in April, rowing back from earlier plans to charge as much as 20 percent.

However, a government spokesman said in December Zambia would introduce a variable tax on mineral royalties that will be adjusted according to metal prices. (Reporting by Chris Mfula; Editing by James Macharia)