Zambia is unlikely to reclaim its position as the largest producer of copper in Africa until prices improve and its power challenges are overcome, says professional services firm KPMG Zambia director Michael Phiri.

Zambia produced 711 515 t of copper in 2015 and currently ranks eighth among the global top ten copper producers. In Africa, Zambia ranked second behind the Democratic Republic of Congo (DRC), which produced 905 000 t of copper in 2015, according to Web-based publication Mineweb.

Zambian Mines, Energy and Water Development Minister Christopher Yaluma told Mining Weekly in November 2015 that the country was intent on reclaiming its number one position as Africa’s largest copper producer, which has been held by the DRC since the end of 2013, when it produced more than 846 000 t.

However, he conceded that several challenges – which included the improvement of national infrastructure, such as electricity generation and transmission networks, roads and railway systems – had to be overcome to support and develop the mining sector.

Phiri stresses that power disruptions have impacted significantly on production volumes at many of Zambia’s mines, with electricity constraints also inhibiting the full downstream beneficiation of copper ores and, therefore, greater industrialisation opportunities for the country.

Nonetheless, Phiri points out that the World Bank’s Scaling Solar programme awarded contracts last month to renewable-energy companies First Solar, Enel Green Power (EGP) and Neoen to develop two photovoltaic (PV) power projects in Zambia.

First Solar and Neoen will build a 47.5 MW power plant, scheduled for completion by mid-2017, in the Lusaka South Multi-Facility Economic Zone (LSMEZ).

EGP has been awarded the right to develop, finance, construct and operate the project for the construction of a 34 MW solar PV plant, also in the LSMEZ. Scheduled for operation in the second quarter of 2017, it will generate about 70 GWh/y.

Phiri notes Zambian coal miner and power producer Maamba Collieries’ 300 MW coal-fired power station in the Sinazongwe district of Southern province is set go live in the coming weeks. The power station’s capacity will be increased to 600 MW in Phase 2, depending on demand.

About 1 000 MW of hydropower has been added to the national power grid over the past 18 months, which is assisting in alleviating electricity challenges, he adds.

Phiri cautions that despite government’s introducing a new sliding-scale mineral royalty tax system on June 1 – which mining companies largely approve of – the weak state of the global economy and low copper price is nonetheless placing significant operating pressures on copper producers in Zambia.

“Miners continue to batten down the hatches and are attempting to weather the current economic storm by optimising cost reductions while increasing operational efficiencies . . . long-term viability of a number of copper mines remains in jeopardy, owing to the depressed copper price.”

Phiri says that most new exploration and expansion projects have been put on hold, but he points out that a notable exception is diversified mining and marketing company Glencore’s $950-million expansion of the Mopani copper mines.

This long-term project was planned well before the current economic and commodity downturn, and forms part of Glencore’s plan to refurbish assets and production costs at its Zambian mines.

Additionally, Zambia Chamber of Mines president Nathan Chishimba believes that the country has reached a “defining moment” where critical decisions need to be made to ensure mining operations can survive the current low-price cycle.

“There is currently an attendant battle of low-cost attrition facing the industry, in which the leaner, meaner operations will strive to crowd out the higher-cost operations.

“It is a question of the Zambian mining industry learning very quickly to adapt to existing competitive forces in the global industry or perishing in this battle of low-cost attrition and current oversupply,” he explains.

Chishimba advocates for collective wisdom among stakeholders to realise diversification on two levels.

“At the first level, we must harness our collective capacity to see how we can use Zambia’s current prowess in mining to empower and diversify our national sources of revenue.

“At the second level, we must ensure that, even within the mining sector . . . our country develops the capacity to attract fresh capital that can be used to further exploration for minerals other than copper,” he states.

He emphasises that there is “demonstrable evidence” that Zambia’s current mineralisation supports the development of commodities other than copper, which will greatly reduce the county’s vulnerability to the “vagaries” of the copper price cycle.