As South Africa’s primary copper reserves are slowly being depleted, the country will need assistance from other African copper mines – particularly those in the Copperbelt region – for additional supply, says Copper Development Association Africa (CDAA) centre director Evert Swanepoel.

“Currently, South Africa’s primary reserves are decreasing because the local primary copper mines are nearing their end-of-life,” he says, adding that the remaining copper mines in South Africa do not have enough sustainable capacity and reserves to provide the necessary supply required by the local industry.
South Africa’s primary copper reserves originate from, among other mines, JSE-listed Palabora Mining Company’s copper mines, in Limpopo, and coal and heavy minerals mining company Exxaro’s Black Mountain polymetallic mine, near Aggeneys, in the Northern Cape. Copper is also produced as a by-product of the platinum mines operating in the Bushveld Igneous Complex, in Limpopo.

Meanwhile, believing that Zambian copper mines can assist South Africa in terms of copper supply, Swanepoel says the CDAA plans to engage these mines about a future raw copper supply partnership. He adds that such a partnership could also assist Zambia- and Africa-based mines by providing them with downstream processing options for raw copper.

“I believe that African mines and South Africa’s copper industry can both benefit from such a partnership,” he says.

Africa produces about 900 000 t of copper a year, with the Copperbelt region, including Zambia and the Democratic Republic of the Congo, accounting for about 9% of the total raw material copper that is mined in the world.

Swanepoel further points out that Zambia currently operates one of Africa’s largest copper mines – the Kansanshi copper mine, near Solwezi, the capital of the Northwestern province.

Kansanshi, which is 80%-owned by mining and metals company First Quantum Minerals subsidiary Kansanshi Mining, is expected to produce between 255 000 t and 270 000 t of copper this year, according to First Quantum Minerals.

Other mines mentioned by Swanepoel include gold mining company Barrick Gold’s Lumwana copper mine, in Zambia, and the $450-million greenfield Lubambe copper mining project, which is owned by Brazilian multinational diversified metals and mining company Vale, mining and minerals company African Rainbow Minerals and investment holding company Zambia Consolidated Copper Mines, otherwise known as ZCCM-Investments Holdings.

Imports and Exports

With the reduction of copper supply from South Africa’s primary copper mines, Swanepoel has noted an increase in copper imports, as more CDAA members currently depend on imports, which was never the case in the past.

“The local industry is importing more copper from overseas, as copper rods are a key product for the electricity industry,” he says. Local companies currently cannot buy copper cathode from the primary local mines to produce copper rods, as these mining companies already use extracted copper cathode to produce copper rods for South African industries. Therefore, the companies resort to importing copper cathode for their own production processes, Swanepoel explains.

An additional consequence of the increase in copper imports includes growing financial strain as the local industry’s input costs rise, owing to the expanded stockholding of imported copper supply to ensure market availability, he says.

However, Swanepoel insists that copper remains in high demand, particularly with China being the key driver worldwide, owing to its consumption of base metals for production and manufacturing.

“The common consensus is that China will remain the key driver for the commodity until 2020, sustaining copper demand until then,” he adds.

Global energy and mining research consultancy Wood Mackenzie noted in its base metals demand forecast last year that China would account for 52% of base metals demand by 2017, with factors such as continued urbani- sation and rising domestic wealth supporting the growing demand.

Meanwhile, Swanepoel asserts that the CDAA believes that overseas copper demand, and the good prices obtained by scrap merchants for copper, are fuelling copper and cable theft in South Africa.

“Legal and illegal copper scrap dealers are exporting copper at rates that vary from about R70 000/t to R80 000/t, which is creating greater demand for copper scrap in the local industry,” he says.

Therefore, a key goal of the CDAA is to curb the export of copper so that it can be beneficiated by the local copper industry. “It is important to retain copper and copper scrap locally, as it can be remelted and used again in the industry,” stresses Swanepoel.

Nevertheless, the association has noted a decrease in the number of copper export permit applications in the past few months.

“The export permit applications for copper this year accounted for the export of 9 951 t in January, which decreased to 6 752 t in February, according to the number of permit applications for that month. “This indicates that the guidelines for scrap metal exports, issued by the International Trade Administration Commission of South Africa in August last year, which stipulates that local industry buyers of scrap metal receive a 20% reduction from the international price, have yielded relative results,” he points out.

Swanepoel maintains that a feasible solution would be to place a duty on exports, which would help South Africa to monitor copper exports. Local industry will benefit if an export surcharge is implemented to provide local industry with the advantage of buying the copper before it is exported, he says.

“By offering the local copper industry the chance to buy the copper first, employment can be maintained, foundry processes can continue and the local industry will grow,” Swanepoel concludes.