Production at global metals and mining company First Quantum Minerals’ Sentinel copper mine, in Zambia, for the first quarter of this year was broadly in line with the company’s expectations, with production having increased by 3% year-on-year.

The company posits that innovation helped ensure the robust management of costs, reducing the unit cost of production, but savings were outweighed by a dramatic rise in mineral royalty tax as a result of high world copper prices that pushed the country's largest taxpayers to the highest level of the tiered tax system.

The 58 252 t of production during the quarter at Sentinel was despite repair work on the mine’s ball mill limiting throughput and heavy rainfall recorded in the North Western province, says First Quantum.

Sentinel’s total production amounted to 28.4% of the mining company’s global production of 205 064 t, while the mining unit’s total copper sales volume increased by 45%.

“Sentinel mine delivered in line with the company’s overall plan despite the heavy rains experienced in the quarter. With our continued low costs and the strong copper price, we generated significant cash flow,” says First Quantum country GM Kingsley Chinkuli.

The continued increase in copper production at Sentinel is a direct result of First Quantum’s investments into its operations, notes Chinkuli. The investments have led to a significant reduction in the unit cost of production.

“At our operations, we aim to be efficient while also living up to the expectations of all our stakeholders,” he says.

In the third quarter of 2020, Sentinel achieved its highest ever quarterly production of 70 829 t and recorded low cash costs.

Chinkuli posits, however, that the good performance by Sentinel continues to be impaired by the current tax regime. 

Zambia uses a sliding scale for the determination of mining royalty tax rates, linked to the prevailing copper price. The scale is adjusted so that royalties are paid at higher levels as commodity prices climb and are reduced as prices fall.

Chinkuli says that, for the company to continue being a major contributor to the Zambian economy, the government needs to put in place a competitive mining sector tax regime to attract foreign direct investment that should seek to adequately compensate the country while remaining internationally attractive and competitive.