January 21, 2019 / 10:27 PM / 10 months ago

CORRECTED-UPDATE 1-Barrick explores options for Zambian copper mine under pressure from taxes

(Corrects attribution of sixth paragraph to Barrick website from a separate statement.)

Jan 21 (Reuters) - Barrick Gold Corp said on Monday that it was considering all options for Lumwana copper mine in Zambia as the country’s proposed new mining taxes would make it challenging to generate adequate returns for all its stakeholders.

Barrick, which recently completed $6 billion deal to buy rival Randgold, said it is continuing to engage with the Zambian government to find a mutually beneficial solution for the operation of the mine in the wake of the new tax changes.

“Given the challenging conditions the mine was facing, all options would have to be considered,” the company said in a statement.

But Barrick said the media reports about the sale of the business were untrue.

Zambia, Africa’s second-largest copper producer, increased its sliding scale for royalties of 4 to 6 percent by 1.5 percentage points from Jan. 1 and introduced a new 10 percent tax when the price of copper exceeds $7,500 per tonne.

Barrick expects Lumwana to produce 190 million-225 million pounds of copper for 2018, roughly half of its total production, according to Barrick’s website.

The company-wide preliminary full-year copper production for 2018 was 383 million pounds, Barrick said in a separate statement.

“The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders, such as the significant contribution of more than $3.3 billion it has already made to the Zambian economy over the past 10 years,” Barrick’s chief operating officer for Africa and the Middle East, Willem Jacobs, said in a statement.

Barrick has announced plans to sell a variety of non-core core assets, cut costs following its acquisition of Randgold.

“Lumwana has made detailed proposals to the Government about a partnership approach which would provide the State with an improved share in the economics of Lumwana without overburdening the mine,” Jacobs said.

Barrick already works to end a nearly two-year-long tax dispute in Tanzania that has effectively shuttered operations there and forced it to consider options for its stake in Acacia Mining PLC, including possible sale.

Barrick also said preliminary gold production for full year 2018 was 4.53 million ounces and for the fourth-quarter it was 1.26 million ounces. (Reporting by Sonam Rai and Denny Thomas; Editing by Cynthia Osterman)

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