Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Canadian miner First Quantum Minerals Ltd is weighing an investment of close to $1bn at Africa’s biggest copper mine in Zambia despite a feud with state miner ZCCM-IH over project funding. First Quantum holds 80pc of Kansanshi Copper mine while ZCCM-IH holds the balance. 


According to a company presentation given to the Zambian government, this investment will improve production for Kansanshi copper mine from  235,000mt in the previous year to 300,000mt this year. A similar project was considered in 2011 at $1.5bn, but it did not take off at that time. 


However, the the board approval for this investment is pending and could be a complicated process due to a dispute between miners and the Zambian government over taxes and assets. The plans will be submitted to the board this year, but the project is unlikely to get approval without any changes in the Zambian tax regime. 


Some of the taxes that are impacting production costs at the mine include a copper royalty tax that was increased by 1.5pc in 2019 and a new 10pc tax rate, which comes into effect whenever global prices for copper ore exceed $7,500/mt. 


The news of this investment comes at a time when western miners are increasingly on the edge as Zambia and other neighbouring African countries seek an increase in their share of revenues from natural resources being mined by them. 

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