First Quantum Minerals has called off plans to lay off 2,500 workers in Zambia. The job cuts are over an increase in mining taxes. The firm has since committed to extend talks with the southern African nation’s government over the issue.
In a press statement from last month, the firm said that it has exhausted all other avenues of cost reduction. Moreover, the aforementioned job cuts were to be implemented in phases during the first three months of 2019.
Zambia, which is Africa’s second-largest copper producer, increased this year its sliding scale for royalties of 4% to 6% by 1.5% points. The country also introduced a new 10% tax in circumstances where the price of copper exceeds $7,500 per tonne.
The nation also plans to replace value-added tax with a sales tax by April to help bring down mounting public debt. The miner had earlier planned to lay off any Zambian involved in its production activities. Had it taken effect, 1,250 employees at the Kansanshi mine in Solwezi and the Sentinel operation at Kalumbila -respectively- would have been affected.
However, in a statement released earlier on this week, the company has since decided to reduce only those elements of its workforce in Zambia that are associated with Capital Projects. This, according to the company is after having considered various factors resulting from the new taxes.
In 2017, First Quantum accounted for more than half of the country’s copper output, and is the largest individual taxpayer. Mining operations in Zambia, in turn, account for 84% of the Canadian miner’s revenue. Other than First Quantum, companies operating in the southern African nation include Glencore, Vedanta Resources and Barrick Gold.