Identifier
Created
Classification
Origin
08LUSAKA444
2008-04-18 10:55:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Lusaka
Cable title:  

U.S. MINING MAJOR ON NEW TAX AND LEGAL REGIME IN

Tags:  EMIN EINV EFIN ZA 
pdf how-to read a cable
VZCZCXRO1690
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLS #0444 1091055
ZNR UUUUU ZZH
R 181055Z APR 08
FM AMEMBASSY LUSAKA
TO RUEHC/SECSTATE WASHDC 5720
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RHMFISS/HQ USAFRICOM STUTTGART GE
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS LUSAKA 000444 

SIPDIS

SENSITIVE
SIPDIS

FOR AF/EPS, AF/S, EEB/ESC/IEC

E.O. 12958: N/A
TAGS: EMIN EINV EFIN ZA
SUBJECT: U.S. MINING MAJOR ON NEW TAX AND LEGAL REGIME IN
ZAMBIA

REF: A. LUSAKA 396


B. LUSAKA 376

C. LUSAKA 349
UNCLAS LUSAKA 000444

SIPDIS

SENSITIVE
SIPDIS

FOR AF/EPS, AF/S, EEB/ESC/IEC

E.O. 12958: N/A
TAGS: EMIN EINV EFIN ZA
SUBJECT: U.S. MINING MAJOR ON NEW TAX AND LEGAL REGIME IN
ZAMBIA

REF: A. LUSAKA 396


B. LUSAKA 376

C. LUSAKA 349

1.(SBU) Summary: Representatives of Freeport McMoRan/Phelps
Dodge Mining Zambia (FM/PDMZ) said that the new tax and legal
regime for mining projects introduced in early 2008 by the
Government of Zambia "dampens...enthusiasm" for pursuing
projects in Zambia, but would not cause the company to pull
out of current prospecting activities. End summary.


2. (SBU) Will Wilkinson, Vice President, Africa, Freeport
McMoRan Copper & Gold, which as of 2007 owns Phelps Dodge
Mining Zambia, and Dudley Barker, a consultant who represents
the company in Zambia, told P/E Chief and Deputy Chief on
April 17 that they agreed with the views of other mining
firms operating in Zambia (Reftels). The way in which the
new tax regime and mining development law were imposed --
unilaterally, without any industry consultation -- was
troubling. At the same time, they noted that they
appreciated the GRZ's interest in tapping more benefits from
high copper prices for the people of Zambia.


3. (SBU) Wilkinson commented that the new tax and legal rules
"dampens our enthusiasm" for Zambia, which has had a business
environment that until now had always compared favorably to
that in the Democratic Republic of Congo. He stated that the
new regime "raised the bar" for the pursuit of future copper
mining projects, and changed the economics of a go or no-go
decision--simply put, lower quality copper discoveries that
are more costly to produce will not be developed.

4 . (SBU) Although it used to hold major interests in the
Lumwana and Kansanshi Copper Mines in North Western Province,
FM/PD is not active at present in copper mining or
production. It has two prospecting licenses in the North
Western Province, one in the remote area of Kapombo near the
Angola border, and another northeast of Kansanshi Copper Mine
(Refs) near the border with the DRC. FM/PDMZ also has a
partnership with U.K. mining junior African Eagle Resources
to prospect in an area near Ndola, on the traditional
copperbelt.


5. (SBU) Barker, a U.K.-born, long-time Zambian resident with
extensive mining sector experience, voiced concerns about the
long-term viability of copper mining in Zambia. Slumping
copper prices could wreak havoc on the sector, he warned.

MARTINEZ