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Zambia President Wants Swift Deal in $7.9 Billion Mine-Tax Fight
LUSAKA (Capital Markets in Africa)- Zambian President Edgar Lungu wants his tax authority and First Quantum Minerals Ltd. to speedily resolve a disputed $7.9 billion tax bill the copper producer received this week, his spokesman said. Shares in the Vancouver-based company gained.
“It’s a policy of government not to interfere with independent assessments made by the tax authority,” Amos Chanda said by phone Wednesday from the capital, Lusaka. “All we do is to encourage quick negotiation of the parties to get to an agreement quickly so that there are no anxieties on both sides.”
Shares in First Quantum, which derives 84 percent of its revenue from Zambia and accounts for more than half of the country’s copper production, fell 12 percent in Toronto on Tuesday after it announced the tax authority had demanded the payment. The company “completely refutes” the assessment, which includes $5.7 billion of interest, Chief Executive Officer Philip Pascal said on a call with investors Wednesday.
The stock regained some ground on Wednesday, closing 3.7 percent higher at C$18.65.
First Quantum isn’t the first miner to be hit with a massive tax bill for operations in Africa. Last summer, Tanzania sent Acacia Mining Plc a demand for payment equal to almost two centuries’ worth of the gold miner’s revenue. And the Democratic Republic of Congo is moving ahead with a new mining code that would dramatically raise tax payments. The Zambian government in 2015 reversed a move to increase mine royalties to as much as 20 percent after Barrick Gold Corp. said it would close its mine there.
The Zambia Revenue Authority is autonomous and the government would only intervene in the dispute as “a matter of the last resort and if circumstances demand that an intervention is made,” Chanda said. “We are very confident in the professionalism in Zambia Revenue Authority that it will deal with investors within the agreed parameters of tax administration.”
Source: Bloomberg Business News