Jeu 29 Oct 2009 15:09
Lumwana says upgrades mine before rains
Thu Oct 29, 2009 12:54pm GMT
Print | Single Page[-] Text [+] * Spends $9 million to improve open cast mine
* Seeks stable tax policies to carry out expansions
LUSAKA, Oct 29 (Reuters) - Zambia's Lumwana Mining Company, a unit of Equinox Minerals (EQN.AX: Quote) (EQN.TO: Quote), said on Thursday it had upgraded facilities to mine for copper during the rainy season after heavy rains cut the company's 2009 output forecast.
Lumwana managing director Harry Michael said the open pit mine, which reduced its 2009 copper concentrate output forecast to 110,000 from 170,000 tonnes, due to difficult mining conditions during this year's wet season, would now only achieve its target in 2010.
"We spent $9 million on structural projects such as lifting the walls to ensure that the water does not overflow ... we have also improved the drainage and this will minimise suspension of production for fear of environmental damage," Michael said.
Michael said he hoped Zambia's government would not renege on an agreement waiving mining taxes to the firm, after the country's revenue authority this week started to look into the books of some mining firms to determine their profitability.
He said Lumwana's future expansion to the mine would largely depend on stable tax policies.
Foreign owned mining companies have accused the government of abrogating development agreements it signed with them, pledging lower mining taxes, by raising mineral royalty to 3.0 percent from 0.6 percent and corporate tax to 30 percent from 25 percent in 2008.
The government also introduced a 15 percent variable profit tax and a 25 percent windfall tax, which it later scrapped in 2009.
Michael said Lumwana agreed with Zambian authorities that it would only start paying taxes in 2017 to allow the company to pay back more than $550 million it still owes foreign banks.
"Lumwana is a low grade copper deposit whose economics is extremely sensitive. If we are unable to pay the loans, the banks can close down the mine," Michael said.
"It is critical for the success of the project that the taxes continue to be deferred until the debt is repaid."
Other foreign mining firms operating in Zambia are Mopani Copper Mines (MCM), a unit of Glencore International AG [GLEN.UL], Konkola Copper Mines (KCM), majority owned by London-listed Vedanta Resources (VED.L: Quote) and Kansanshi mine, a unit of First Quantum Minerals (FM.TO: Quote) of Canada. (Editing by Shapi Shacinda. Editing by David Brough)