(Bloomberg) -- Copper miners in Zambia have halted $2 billion of planned investments because a royalty tax introduced last year makes the projects unviable, according to an industry lobby group.A plan by First Quantum Minerals Ltd. to invest $1 billion extending the life of its Kansanshi operation won’t proceed until the royalty is deductible from other corporate taxes, said Sokwani Chilembo, chief executive officer of the Zambia Chamber of Mines. The same goes for EMR Capital-backed Lubambe Copper Mine’s project to invest a similar amount in a new mining operation, he said.“We need this royalty payment regime removed for progress to begin,” Chilembo said in an interview. “If the government thinking is otherwise, good luck.”John Gladston, a spokesman for Vancouver-based First Quantum, declined to comment. Lubambe is “actively engaged” in discussions with the Zambian government about its planned extension project in the country, CEO Nick Bowen said in an emailed response to questions.“The extension project can deliver enormous benefits for Zambia and its people,” he said. “The concessions needed are not material compared to the benefits to Zambia.”Zambia’s uneasy relationship with mining investors has deteriorated over the past 12 months, with the government clashing with Glencore Plc over the Switzerland-based company’s plan to mothball Mopani Copper Mines’ operations. Zambia’s increasingly aggressive stance over the nation’s key export industry may partly reflect maneuvering by President Edgar Lungu as he struggles with economic challenges ahead of next year’s elections.Zambia doesn’t get enough from its mineral resources, but would be willing to consider mining company grievances over the royalty, Finance Minister Bwalya Ng’andu told state television on Sunday. Mining investors are pushing for tax cuts after Zambia approached external creditors for as much as $1 billion in debt-servicing relief as the government seeks to restructure its foreign loans.“It’s hard to picture large new investments getting the green light under such a changeable tax framework as we have seen recently; mining investors are in for the long haul and need stability,” said William Tankard, principal copper analyst at Wood Mackenzie Ltd.Zambia, Africa’s No. 2 copper producer, depends on the metal for about 70% of its export revenues. The chamber expects the coronavirus pandemic to cut output this year to about 764,188 tons, far short of Zambia’s target of 1 million tons.More about Zambia economic challengesThe revenue-based royalty increases from a minimum of 5.5% to 7.5% when copper trades at $6,000 to $7,500 a ton, with a further jump to 10% should prices top $9,000. Copper has traded above $6,000 since the end of June.The royalty represents a double taxation of producers, which also pay corporate income tax, Chilembo said.“This pushes up the effective tax rate and makes these projects unattractive given the cost of capital,” he said. “As soon as the double taxation element is removed, these projects become viable.”The chamber wants the royalties to be deductible from profit tax.(Updates with comment by Lubambe CEO from fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(In United States dollars) TORONTO, Sept. 17, 2020 (GLOBE NEWSWIRE) -- First Quantum Minerals Ltd. (“First Quantum” or “the Company”) (TSX:FM) today announced that it has successfully completed the pricing of its offering (the “Offering”) of $1,500 million aggregate principal amount of 6.875% Senior Notes due 2027 (the “Notes”). The original offering amount of the Notes of $1,000 million has been increased to $1,500 million. The issue price of the Notes is 100.000%.Interest on the Notes will accrue from the issue date at a rate of 6.875% per annum and will be payable semi-annually. Settlement is expected to take place on or about October 1, 2020, subject to customary conditions precedent for similar transactions. The Notes will be senior unsecured obligations of the Company and will be guaranteed by certain of the Company's subsidiaries.The Company intends to apply the gross proceeds from the sale of the Notes towards (i) the repayment of $650 million principal amount under the Company’s existing revolving credit facility and (ii) the redemption in full of the Company’s outstanding Senior Notes due 2022. Fees and expenses associated with the Offering are expected to be paid using cash on balance sheet.The information in this announcement does not constitute an offer of securities for sale in the United States or any other jurisdiction. Securities may not be offered or sold in the United States unless they are registered or are exempt from the registration of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). The Notes will not be registered under the U.S. Securities Act, or the securities laws of any state of the U.S. or other jurisdictions and the Notes will not be offered or sold within the U.S. or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S of the U.S. Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and the applicable laws of other jurisdictions. The Company does not intend to conduct a public offering in the United States or any other jurisdiction. It may be unlawful to distribute this announcement in certain jurisdictions.The information in this announcement does not constitute an offer, or a solicitation of an offer, of securities for sale in the United States, Canada, the EEA, the UK, Switzerland, Panama, Hong Kong, Japan, Singapore, or any other jurisdiction in which such an offer, solicitation or sale is not permitted.In member states of the EEA (“Member States”) or the UK, this announcement and any offer of securities if made subsequently is directed only at persons who are "qualified investors" (any such person a “Qualified Investor”) as defined in Regulation (EU) 2017/1129 (as amended and superseded) (the “Prospectus Regulation”). Any person in the EEA or the UK who acquires securities in any offer of securities (an "investor") or to whom any offer of securities is made will be deemed to have represented and agreed that it is a Qualified Investor. Any investor will also be deemed to have represented and agreed that any securities acquired by it in the offer have not been acquired on behalf of persons in the EEA or the UK other than Qualified Investors or persons in the UK and other Member States for whom the investor has authority to make decisions on a wholly discretionary basis, nor have the securities been acquired with a view to their offer or resale in the EEA or the UK to persons where this would result in a requirement for publication by the Company of a prospectus pursuant to the Prospectus Regulation. The Company and others will rely upon the truth and accuracy of the foregoing representations and agreements. This announcement constitutes a public disclosure of inside information by the Company under Regulation (EU) 596/2014 (16 April 2014). References to Regulations or Directives include, in relation to the UK, those Regulations or Directives as they form part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 or have been implemented in UK domestic law, as appropriate.This communication is only directed at (i) persons having professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, (the “Order”), or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order, or (iii) persons to whom it would otherwise be lawful to distribute to or direct at, all such persons together being referred to as “relevant persons”. The Notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this communication or any of its contents.This announcement is not, and under no circumstances is to be construed as, a prospectus, an advertisement or a public offering of the securities referred to herein in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this announcement or the merits of the securities referred to herein, and any representation to the contrary is an offence.First Quantum's address is set out below. For further information, including obtaining a copy, once filed, of the report required to be filed with applicable securities regulators in respect of the matters described in this news release, please contact First Quantum at one of the numbers listed at the end of this news release.Suite 2600, Three Bentall Centre 595 Burrard Street, P.O. Box 49314 V7X 1L3 Tel: +1 416 361 6400 Toll Free: +1 888 688 6577For further information visit our website at www.first-quantum.comNorth American contact: Lisa Doddridge, Director, Investor Relations Tel: (416) 361-3400 Toll free: 1 (888) 688-6577 United Kingdom contact: Clive Newall, President Tel: +44 7802 721663 E-Mail: email@example.comCAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATIONCertain information contained in this news release constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information under applicable Canadian securities legislation. Such forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company to be materially different from any future results, financial condition, performance or achievements expressed or implied by such forward-looking statements or information. Such factors may include, among others, those factors disclosed in the Company's documents filed from time to time with the Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Ontario Securities Commissions, the Autorité des marchés financiers in Quebec, the United States Securities and Exchange Commission and the London Stock Exchange. PROHIBITION OF SALES TO EEA OR UK RETAIL INVESTORSThe Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA or the UK. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU ("MiFID II") or (ii) a customer within the meaning of Directive 2016/97/EU, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II or (iii) not a Qualified Investor. Consequently, no key information document required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA or the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA or the UK may be unlawful under the PRIIPS Regulation.