August 2, 2012 / 11:23 AM / 5 years ago

Canadian miner First Quantum to invest $4 billion in Zambia

LUSAKA (Reuters) - Canada’s First Quantum Minerals (FM.TO) plans to invest more than $4 billion in a new mine and expansion projects in Zambia - Africa’s top copper producer - in the next two to three years, a company official said.

Adam Little, head of tax at First Quantum Minerals, told Reuters more than $2 billion would go into upgrading its Kansanshi mine while its new Trident mine would absorb about $1.7 billion.

First Quantum has been talking to the government on deals to guarantee policy stability, he said.

“It would be nice and would help us with our investment if we could have some assurance for maybe 15 years that the tax rates would be as you see them now,” Little, who was on a visit to Zambia, said on Thursday.

Little also urged the government to reduce mineral royalty taxes, which doubled to 6 percent last year.

“We at First Quantum and probably the industry as a whole would prefer the mineral royalty tax to be at a lower level, in the 3 to 4 percent range,” he said.

On allegations made by Zambian officials that mining companies were not paying their due taxes, Little said the government may have over-estimated copper output.

Foreign miners operating in Zambia include Glencore (GLEN.L), Indian miner Vedanta (VED.L), Barrick Gold (ABX.TO), Brazil’s Vale (VALE5.SA) and China Nonferrous Metals Corporation Ltd 1258.HK.

First Quantum said on Wednesday second-quarter profit fell 9 percent as lower copper prices and higher production costs outweighed higher copper and gold sales volumes.

It said its board had approved in May the Sentinel project in Zambia, part of the Trident project, and was ramping up development. Sentinel is expected to produce up to 280,000 to 300,000 tonnes of copper in concentrate annually.

The company had some $900 million in cash and $1.3 billion of debt as of June 30. First Quantum has budgeted some $1.2 billion to $1.4 billion in capital spending for the year as it boosts output at Kansanshi and starts up its Kevitsa mine in Finland.

Reporting by Chris Mfula; Editing by Jon Herskovitz and Anthony Barker

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