Barrick Gold suspends operations in Zambia

LUSAKA (Scrap Monster): This is the latest strike to Barrick, after the company had borrowed heavily to acquire the Lumwana mine, in the year 2011, when the price of copper was at the lowest level. According to the officials in the Zambian government, the royalties on open pit mines in Zambia will hike from 6 percent to 20 percent, under a new law, which will be in effect from January 1^st.

Kelvin Dushnisky, the Co-President of Barrick stated that, the company will have no choice after the law will come to effect in the beginning of next year but to suspend the operations of the copper mine at Lumwana. The company provides jobs to 4,000 workers at the copper mine. Dushnisky, stated the company will have to start cutting down jobs, from the beginning of March, after providing the government of the country, with a two month  mandatory notice. The company stated that, the mine will stop its production by the middle of next year.

It is still not clear whether the company would be able to negotiate with the government before it shutters the copper mine. Copper is the main export item of Zambia. Other companies, mainly like the Canadian based First Quantum Minerals, and also the Swiss based Glencore Plc, also produces copper in Zambia.  Both of these companies have also postponed the investment in the country.

Even though the company’s mine Luwana, is an open pit mine, it is one of the country’s most expensive operations. The production cost of the mine is noted to be 2.98 dollars per pound, which iis higher than the current price of copper, running lower at 2.90 dollars per pound, due to the increase in the supply of the metal and also due to the decline in demand from China, the largest consumer of the commodity.