Copper production in Zambia will reach just more than 800 000 t by the end of this year as the country is taking steps to regain its position as Africa’s leading copper producer, according to Zambia Chamber of Mines (CoM) initiative Mining for Zambia (MFZ).

“This is a conservative estimate as the Zambian government is more optimistic and believes production will be closer to 850 000 t,” MFZ explains to Mining Weekly.

MFZ notes that copper accounts for most of the country’s exports, foreign exchange and direct investment, as well as a “significant slice” of government’s tax revenue.

“When the previously nationalised mining industry, under holding company Zambia Consolidated Copper Mines, was privatised towards the end of the 1990s, Zambia’s total copper production was just over 300 000 t.”

Under the newly privatised industry, however, MFZ notes that this figure has “more than doubled” within ten years on the back of sustained investment and a rising copper price.

The Zambian CoM notes that $12.4-billion was invested in new mining ventures from 2000 to 2014 by just six mining companies – Mopani, Konkola Copper Mines (KCM), First Quantum Minerals (FQM), Barrick Lumwana, FQM Kansanshi and Lubambe.

This ongoing investment, MFZ notes, has produced significant quantities of copper for export and driven correspondingly higher export earnings. Production grew to 711 000 t in 2015, with between 70% and 80% of this 2015 output exported. In 2016, total production was about 762 000 t.

Advantages for Investors

In an exclusive interview with MFZ in May, Zambian Mines and Minerals Minister Chris Yaluma told MFZ that “Zambia is catching up and will soon regain the top spot as Africa’s leading copper producer”.

He explained that political stability has traditionally been a big strength of Zambia, as the country has always been “at peace and has none of the ethnic or tribal violence which has been such a serious problem in various other African countries”.

Yaluma also highlighted Zambia’s attractiveness as an investment destination, given the country’s other key strengths.

He pointed out that the country boasts abundant and varied mineral resources that include base metals, precious metals, gemstones and energy metals such as uranium. In addition, Zambia offers a competitive mining tax regime and stable policies, a well-educated, English-speaking workforce and an open economy with no restrictions on the expatriation of profits.

However, Yaluma acknowledged that the biggest challenge currently facing the industry is its power deficit.

“[According to Yaluma], Zambia’s annual copper production would currently be closer to 1.5-million tonnes if it hadn’t been for the twin factors of the power crunch and the long slide in the copper price in recent years,” MFZ notes.

To mitigate this challenge, many new power generation plants are coming on stream in Zambia – including Maamba, Itezhi-Tezhi and Kafue Gorge Lower.

“There is now a master plan for not only power generation but also transmission, reticulation and distribution. If the reform of the power sector can be managed in the long-term interests of business and residential consumers, with the aim of powering economic growth, Zambia’s investment case will be considerably enhanced. The country will then be one step closer to regaining its spot as Africa’s leading copper producer,” said Yaluma.

The ‘Solwezi Effect’

MFZ further notes the value of the mining industry in Africa, pointing out to Mining Weekly that mining companies stimulate economic growth in the areas where they operate by creating jobs and, thus, wealth and disposable income far beyond the boundaries of their mines.

“The levels of infrastructure, the size and sophistication of the business sector and the standard of living of the local population all tend to be higher in mining towns. A prime example is Solwezi, located in the North-Western province, which is home to FQM’s Kansanshi mine – one of Zambia’s biggest copper mines.”

MFZ explains that the North-Western province is sparsely populated and extremely rural, with limited infrastructure. “Despite improvement in recent years, typical indicators of development, such as per capita income, employment and access to water and electricity, are all still much lower in the province than in the Copperbelt, where Zambia’s copper mines are concentrated.”

However, one socioeconomic exception in the North-West province is the town of Solwezi, where FQM’s Kansanshi mine is based.

MFZ explains that Kansanshi produces around 260 000 t/y of copper, which amounts to just more than one-third of Zambia’s total production, and the spending of the company and its employees has a “major effect on the local economy”.

MFZ notes that the “Solwezi Effect” showcases how a mine can be a catalyst for economic development.

Despite continued challenges, particularly around power, MFZ concludes that the investment case for Zambia does appear to be better today than it has been for many years.