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(Bloomberg) — First Quantum Minerals Ltd. plunged the most in almost two years as the miner was hit with a $7.9 billion tax bill by Zambia, which accounts for 84 percent of its revenue.
First Quantum received a letter from the Zambian Revenue Authority dated Monday “noting an assessment for import duties, penalties and interest on consumables and spare parts,” it said Tuesday in a statement. “The company unequivocally refutes this assessment which does not appear to have any discernible basis of calculation and will continue working with the ZRA, as it normally does, to resolve the issue.”
Earlier, Bloomberg reported that the tax authority was announcing a preliminary assessment for a “prominent mining company.” Shares of First Quantum fell as much as 13 percent in Toronto and were down 12 percent when the stock was halted ahead of the statement.
TD Securities analyst Greg Barnes cited the Bloomberg story in a research note, speculating that either First Quantum or Glencore Plc was likely the target of the Zambian assessment.
Last year Zambia cut power to mines, including the Kansanshi pit owned by First Quantum, and two operations held by Glencore, after a fight escalated over tariffs.
First Quantum isn’t the first miner to be hit with a massive tax bill for operations in Africa. Last summer, Tanzania sent Acacia Mining Plc a tax bill equal to almost two centuries worth of the miner’s revenue. And the Democratic Republic of Congo is moving ahead with a new mining code that would dramatically raise taxes and royalties.
(Written by Danielle Bochove)