Zambia's president said Monday the government would act to prevent job losses if Canadian mining giant Barrick Gold pulled out of the copper-rich country over its hiking of mineral royalties. President Edgar Lungu promised "not allow a single mining job to be lost" and directed the ministry of mines to ensure that Barrick's Lumwana copper mine remained operational, his office said in a statement.
Zambia hoisted mineral royalties to 20 percent from six percent on January 1, putting the government on a collision course with mining companies already reeling from a fall in global commodity prices. Canadian firm Barrick Gold announced it would suspend operations at Lumwana over the levy and begin laying off workers in March. "Given the substantial impact of the new royalty and in light of current low copper prices, Barrick intends to proceed with a suspension of operations at Lumwana unless an agreement with the government of Zambia can be reached," the company said last week.
On Monday, workers at the mine, which employs nearly 4,000 people, went on strike over Barrick's decision. A worker representative said over 2,000 workers had downed tools. "They want to know their fate," he added by phone from the mine, which is around 800 kilometres (500 miles) north-west of the capital Lusaka.
Lungu's office said that if Barrick pulled out the government would look for a "strategic technical partner" to team up with the state-run mining investment company ZCCM-IH to keep the mine open.
Zambia is one of the world's largest producers of copper. Lungu, who narrowly won last month's presidential election, said his government was working to "rapidly" address concerns over the new royalties. Zambia's Chamber of Mines has warned the taxes could cost the country $7 billion in output over the next five years - nearly a third of its GDP - and lead to the loss of 12,000 direct jobs in the mining sector. Despite copper contributing around 70 percent of foreign exchange earnings, Zambia is ranked among the world's poorest countries.