Barrick, which has tumbled from $23.50 in February, will have to suspend production at its Lumwana copper mine in Zambia next year. On Jan. 1, 2015, the Zambian government plans to start helping itself to 20 per cent of Lumwana's gross mine revenue, up from six per cent previously. Barrick says Lumwana cannot support this gross royalty at current copper prices ($2.86 a pound; Lumwana cash costs are $1.80 a pound). Lumwana has been a disappointment since Barrick acquired it in 2011, paying $7-billion for its owner, Equinox Minerals Ltd., at the top of the market. The company put the Zambian mine up for sale earlier this year, but has yet to find any takers. It is even less likely to find one with this royalty increase. Barrick anticipates a $1-billion writedown for its fourth quarter. Lumwana's fate is not that surprising; production has consistently failed to miss targets and the company attributed its most recent troubles (in the third quarter) to a conveyor collapse and severe rain.

Lumwana was not the only disappointing copper project Barrick acquired with Equinox. It also acquired Equinox's Jabal Sayid copper deposit in Saudi Arabia. It too is stalled, as it has been since late 2012, when Barrick first brought it to production. Days before the company started mining, however, Saudi Arabia's High Commission for Industrial Security said the mine did not comply with safety and security standards. Barrick has since spent $50-million trying to comply, but it is still without approval. Even if it were in compliance, it would not be allowed to mine. Saudi Arabia's deputy mining minister ordered the company to hold off until it can conduct an investigation as to whether the Equinox purchase required the government's approval. Barrick thinks it might have found a way around these local problems. It has brought on Saudi Arabian miner Ma'Aden as a 50-per-cent joint venturer. The JV deal closed this month and Ma'Aden now aims to have the mine in production by 2016.