By Nicholas Bariyo

Canada's Barrick Gold Corp. (ABX) has halted plans to close its Lumwana Copper Mine in Zambia after the southern African nation scraped a controversial mine royalty plan, the company said Thursday.

The world's largest gold producer intends to continue operating in Zambia, which has an estimated 3.3 billion pounds of proven copper reserves, days after the Zambian government slashed mineral royalty fees to 9% from 20%.

The decision will save thousands of jobs and highlights a thaw in relations between Zambia and mining companies as the country's recently elected President Edgar Lungu seeks to mend ties with investors, analysts say.

"In light of the government's recent announcement, we intend to continue operations at this time," said Barrick co-President Kelvin Dushnisky. "We appreciate the leadership and engagement of President Lungu and the Government of Zambia on this matter."

Zambia on Monday scrapped the mining royalty taxation system that had more than tripled royalty fees in January for open pit copper mines, ending a months-long standoff with mining companies.

Barrick had announced in December last year that it would close Lumwana mine citing the higher royalties. Other miners such as Glencore PLC (GLEN.LN) and First Quantum Minerals Ltd. (FM.T) shelved expansion projects worth $1.5 billion, citing the higher royalties amid low global copper prices.

Zambia is Africa's second largest copper producer after Congo.

Write to Nicholas Bariyo at nicholas.bariyo@wsj.com

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