First Quantum to Fire 2,500 Workers in Zambia Over Tax Hike

(Bloomberg) -- First Quantum Minerals Ltd. plans to cut at least 2,500 jobs at its Zambian operations, citing increased mining taxes introduced by the southern African nation’s government.

• The job cuts will be implemented in phases during the first quarter of 2019 and equally split between the company’s Kansanshi and Sentinel mines.

Key Insights

• Mining companies in Zambia, Africa’s second-biggest copper producer, have repeatedly warned that the tax hikes will harm the industry. More than half the country’s copper mines will probably be unprofitable next year, according to the Zambia Chamber of Mines.
• First Quantum has already announced plans to reduce production at the Sentinel mine in response to an increase in mineral royalties. The company said Friday it will also cut an unspecified number of contractors.
• First Quantum’s announcement is likely to increase tensions with the government -- local press reported earlier this month that Zambia threatened to cancel work permits for some foreign workers at mines that it accuses of announcing job cuts to "arm-twist" the government over proposed tax changes.

Read more on the tax increase:

• Zambia to Raise Mine Royalty in 10th Tax Change in 16 Years
• Zambia Tax Hikes to ‘Break Economy’s Back,’ Mines Lobby Says
• First Quantum to Cut Zambia Copper Output After Royalties Raised

To contact the reporter on this story: Taonga Clifford Mitimingi in Johannesburg at tmitimingi@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill, Alastair Reed

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