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Thursday, January 27, 2022

Barrick’s Bristow says Zambian fiscal reform “a very significant event” for copper producer

Economy Barrick’s Bristow says Zambian fiscal reform “a very significant event” for copper...

The normalization of Zambia’s fiscal regulations was “a very significant event” for the country in its attempt to attract new investment, said Mark Bristow, CEO of Barrick Gold.

Only two months after the election of Hakainde Hichilema as Zambia’s new president, the country reformed tax regulations in its national budget last week.

New rules mean that royalties mining companies pay are deductible from corporate tax, reversing an unpopular decision taken by President Hichilema’s predecessor, Edgar Lungu.

Barrick Gold operates the Lumwana copper mine in Zambia which is on course to contribute roughly 20% of the group’s annual earnings before interest, tax, depreciation, and amortization owing to the improvement in the copper price.

“It’s been an absolute pleasure dealing with this [Hichilema’s] new Government and the real reward is that the mine is really delivering,” Mr. Bristow said regarding Lumwana which he estimated would deliver $400m a year, and possibly even more with the relaxation in Zambia’s fiscal regime.

Zambia has targeted an increase in copper production of about three million tons a year in ten years from the current production of about 800,000 tons.

“There’s no doubt that Zambia is under-invested,” said Bristow.

The improvement in the copper price also means that Barrick will have more flexibility on whether it proceeds to the development of a super-pit at Lumwana.

Mr. Bristow said that exploration geologists working at the mine were looking at targeting improved grades and a lower strip ratio to enable this.

The mine currently has a 30-year life at Barrick’s copper price assumption for its 2021 financial year of $2.75 per pound.

Lumwana is forecast to produce between 250 and 280 million attributable pounds of copper this year.

Production in the group’s third-quarter was 56 million pounds, a slight reduction on the second quarter.

Barrick reported 20 US cents a share in net earnings for the third quarter compared to 23c/share in the second quarter, partly owing to a quarter-on-quarter decline in the realized gold price.

It declared a nine cents a share quarterly dividend in addition to a third $250m payment related to the proceeds of the firm’s sale of its stake in an Australian mine, Kalgoorlie.

Commenting on the gold price, Bristow said it would benefit in the long run from global economic distress.

“World GDP has recovered but it is a lot less (than before the onset of the Covid-19 pandemic). There is no ability of world economies to act and we have these equity bubbles that are unsustainable,” he said.

Analysts think the short-term direction of the gold price hangs in the balance owing to uncertainty over how the tapering of post-Covid-19 stimulus by the US Federal Reserve will impact the economy.

“There’s not much different now with 2010 when we thought we were all over the global economic crisis,” said Mr. Bristow.

9 COMMENTS

  1. We don’t get anything from these mining investors just holes in the ground and fancy words. Dr Musokotwane is such a let down as far as the mining sector is concerned in Zambia. He makes them benefit more than the nation itself. The mines are the only reason that I was not for a UPND government. They financed their campaigns and party and wanted a payback which they now have. A warning to these mines. These sweet deals will soon be reversed.

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  2. Good move. In the long run this will give MUCH more money into Zambian coffers than under Edgar China Lungu’s shortsighted tax regime. Well done Bally.

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  3. Ukupokolola ichi senda kunkoko kunakilila.

    His focus is for his shareholders. Does HH have shares with Barrick’s Bristow company? Sounds more like a surrogate.

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  4. And yes this is what these so called investors were hoping for…a puppet in government and HH fits their agenda….you must be out of your mind to think that westerners want Africa to prosper…..they’re in Africa to push Africa further down the path of destruction and HH is doing them a big favor

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  5. @ no corruption, sometimes it’s important to put politics aside and reason with a heart for the well-being of the people of Zambia. Dr Musokotwane has removed the only mechanism that ensured that Zambia gets income from the mines. Because of accounting gymnastics the mines don’t pay tax. The fact that the exchange rate is depreciating also means that even the measures put in place to have them pay obligations in ZMK have been removed. It’s almost inevitable that the cost of fuel will go up as a result together with the cost of living as a consequence. Don’t be blinded by politics. A little education is a dangerous thing.

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  6. A lot of folks have sentimental attitude to mining / minerals that the country has. What’s the purpose of owning minerals but yet our people leave in squalor?? The large multi-national companies do mining in several countries, use the same principles/’procedures’ in other developed countries. The people in those countries are happier – and am aware many of our brothers and sisters survive dangerous oceans to try to get to those countries
    Now, why can’t we let these multinationals develop this country so that our people are also happier – were you happy with Lungu rhetoric that HH will sell our mines, while continue wallowing in poverty??

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  7. We told you that HH doesnt care about the country but for whites.He has inferiority complex and Zambia now a big hole.
    These youths who voted PF out will have no future and Bally will never employ them apart from employing his own Bantu Botatwe.Wait and see a leader you chose.Zambia is now a sold country

  8. Multinational companies will avoid paying tax as much as they can. Even here in the west they try all sorts of accounting gymnastics to avoid tax. Western countries have tax treaties and strong tax laws and far reaching tax investigation organs that limit how much these companies can hide. I know because I have seen this first hand. Zambia should be careful and make sure the numbers are making sense, not just on paper. If the CEO says its good, he means it good for his shareholders masters. The big question is how is this benefiting zambia and what are we changing to prevent what has happened in the past with these companies

  9. Most people who comment on this site regarding the mining industry are very ignorant. All they talk about is how multinational companies don’t pay tax when in fact, FQM and Barrick are the biggest tax payers in Zambia while state owned mines like KCM and Mopani lag behind and have to be subsidized by the tax payer just to keep them running.

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