More than half of the copper mines in Zambia, Africa's second-biggest producer of the metal, will probably be unprofitable next year with thousands of jobs on the line, as the nation raises taxes for operators, the country's biggest industry lobby group said.
The effective tax rate will range from 86 percent to 105 percent, with about 27,900 jobs at risk, the Zambia Chamber of Mines said in a statement handed to reporters Thursday in the capital, Lusaka.Copper accounts for more than 70% of Zambia's foreign-exchange earnings.
Zambian lawmakers passed legislation this month that increases royalties for copper and cobalt, both key components in electric vehicles, as the southern African nation tries to rein in foreign borrowing and cut a bulging budget deficit.
Mining operators that include Glencore Plc and First Quantum Minerals Ltd. have, through the industry lobby group, warned of more than 21,000 job losses and $500 million in capital spending cuts as a result.
Copper output will be flat next year and will start declining from 2020 as a result of the tax increases, Sokwani Chilembo, CEO at the Chamber of Mines, said by phone. The industry group has forecast production of 820,000 metric tons for this year, he said.
Copper accounts for more than 70 percent of Zambia's foreign-exchange earnings.
(By Taonga Clifford Mitimingi and Matthew Hill)