FIRST Quantum Minerals Plc has postponed investment worth US$1 billion in capital projects in Zambia due to uncertainty on the fiscal regime.
Company director of operations Matt Pascal said while the FQM has recorded remarkable growth rates at Kalumbila and Kasanshi mine projects, there has been a lot of challenges faced by the company, citing uncertainity on the fiscal regime and bureaucracy.
“There has been a lot of uncertainty on the fiscal regime. Obviously this started with application of development agreements and continued [a] couple of years ago with doubling of royalty rate and now [the] continued talk on windfall taxes,” Mr Pascall said.
He was speaking at the just-ended Zambia International Mining and Energy Conference and Exhibition in Lusaka on Tuesday.
Mr Pascall also said the case in point is the change in regime related to the export rate on concentrates.
He said while other mining firms have not yet recouped the initial amount on capital costs, and not been affected by the corporate tax regime, it is not the case with Kansanshi which is severely penalised every time there is a tax rate change.
“Ironically, the change in the export tax rate on concentrates, though this was partly government response to claims by existing smelter operators that they have spare capacity on players like FQM that they should not be allowed to export.
The 10 percent export levy on concentrate export has effectively tied up 350 million tonnes of working capital and has delayed tax payments in order of K80 million to Government,” he said.
He said a stable political and fiscal regime is fundamental for huge capital investment decisions.
“As a consequence of the uncertainty in fiscal regime, FQM has slowed down [on] postponed capital investment worth over US$1 billion in capital expenditure programmes in Zambia,” he said.
Meanwhile, FQM says over US$150 million has been withheld in copper value added tax (VAT) refunds for its Kansanshi mine project while about US$500 million worth of VAT refunds at Zambia Revenue Authorityre has also been denied, a situation he described as “a great concern”.
This money, which is owed by Governement to mining firms, will be repaid only when they produce import certificates from destination countries.