Diversified miner China Non-Ferrous Metals Mining Company’s (CNMC’s) 2009 acquisition of local mining company Luanshya Copper Mines (LCM) and the Baluba mine’s subsequent success reinvigorated the mining town’s economy, says local small and medium-sized business association Luanshya District Business Association (LDBA).

However, the association cautions that the mine’s operations are only expected to continue until 2025 and that the economy has to diversify if the town is to survive the mine’s closure.

The LDBA notes that, historically, the town’s growth and success have been directly linked to the mine’s development, adding that the Copperbelt town’s current economic growth belies the fact that it was once referred to as a ghost town. The LDBA warns that the designation will become appropriate again should the mine remain the focal point of the town’s economy.

Citing the town’s mining history, the association comments that “just as residents of earthquake-prone cities live with the memory of the last quake which flattened their town, residents of Luanshya remember when the newly privatised Baluba mine closed down in 2000 after its owner, Ramcoz Group, ran into financial difficulties”.

Thousands of miners were retrenched, businesses and shops closed down, and many residents left. It was only after 2004 that the town’s fortunes were revived as the mine’s new owner, Enya Holdings Group, ensured that the mine started production again. However, the revival was short-lived, as global metal prices plunged in 2008 as a result of the global financial crisis. Likely attempting to cut its losses, Enya sold its stake in LCM to CNMC in 2009.

CNMC set about upgrading Baluba, attempting to bring it into the twenty-first century by investing about $500-million in the operation. The underground operations were modernised, the concentrator plant was upgraded, a new openpit mine was built, a slag reclamation project was started and a high-quality leach plant was constructed on previously undeveloped ground.

Within five years, yearly copper production had nearly doubled to 18 000 t and employment had grown from just more than 600 people to nearly 3 000. Further, the mine paid about $60-million in corporate tax over the five-year period and its employees paid some $31-million in personal income tax.

Luanshya continues to benefit from this five-year growth period, despite the mine’s underground operations and slag reclamation project being put on care and maintenance earlier this year, owing to the nationwide power restrictions on the mining industry.

“It has affected around 2 000 mineworkers – many are on recess and receive an allowance; some have resigned and others have opted for a voluntary separation package,” says CNMC LCM deputy CEO Robert Kamanga. “Fortunately, our new openpit mine is doing very well and is now fully ramped up to its target production rate of 40 000 t/y.”

The LDBA comments, however, that, “clearly, the town’s fortunes are tied to those of the mine. But the mine won’t last forever.” Kamanga acknowledges this, saying the answer in the face of this foreseeable closure is, “economic diversification, [which] can only happen with the right incentives and policies in place from central government”.

He states that there is a ten-year window of opportunity to implement this vision. “Otherwise, when the mine closes, Luanshya will become a ghost town again. Businesses will close. People will leave. Livelihoods will be affected. And all the money presently being invested and spent here will have been wasted.”

This point is echoed by LDBA chairperson Simukondi Godwell, who says, “government needs to create the financial and tax incentives that will make Luanshya an attractive business destination in its own right. Once large, sustainable businesses are operating here, they will create countless opportunities for smaller businesses and suppliers to feed off.”

He notes that recent investment by retail companies such as Shoprite and Pick n Pay, as well as other telltale signs of economic activity such as the mini-boom in residential property, are primarily the result of the mine’s continued success.

Further, this success has also induced growth in farming and commercial farmers in the nearby Mpongwe area, who are growing soya, beans and wheat, and processing some of their products into cooking oil and chicken feed. Luanshya-based company Golden Lay produces thousands of trays of eggs a day for the local and regional market. The company is expanding thanks to the $24-million investment funding secured in 2012 from private-equity firm Phatisa, which focuses on developing Africa’s agricultural potential.

Godwill notes that there is a cautious sense of optimism in Luanshya, but adds that it comes with some uncomfortable questions. How sustainable is this growth? What if the mine closes again?

Like many of his colleagues in the LDBA, he sees agriculture as offering the most potential to investors. “We can develop agribusinesses here and feed the nation. What crop doesn’t grow in this region?”

Ultimately, says Godwill, a diversified Luanshya economy that is capable of outliving the closure of the mine is dependent on political will. “If there is political will, there won’t be a problem. We will grow. But, with no political will, nothing will happen.”

For now, businesses continue to invest in Luanshya, people continue to move to the town and LCM continues to produce copper for world markets.