Zambia in copper jitters
Windhoek – Zambia has expressed worry at the persistent price fluctuations of copper, a key foreign exchange earner and the mainstay of the country’s economy.
Copper has performed poorly in the first half of this year due to global growth concerns.
Zambia is Africa’s top producer of copper, and like most global producers of the red metal, is worried that the metal’s poor performance could hit its growth prospects.
Prices of copper have remained depressed throughout this year on lingering concerns that global economic growth is still relatively weak, with no help from continued signs of slowdown in China and Germany.
China, a major consumer of minerals, is showing signs of slackening growth marked by falling industrial output, exports and imports.
The price of copper on June 10 fell to US$7 151 per tonne – its lowest since mid-May – on growth concerns from China and the US, the world’s largest consumer of metals.
Yamfwa Mukanga, Zambia’s Mines Minister, said the country is targeting to produce more one million tonnes of copper annually by 2015, but expressed worry on the red metal’s price fluctuations.
“We hope that the price of copper may fare favourably to support production ramp up,” Mukanga said.
One of Zambia’s largest copper producers, Konkola Copper Mines (KCM), backtracked on plans to cut 2 000 jobs at its mines.
KCM had initially said that it was shedding the jobs to cut on rising labour and electricity costs.
“We don’t want out people to lose jobs and we pray that whenever companies are feeling the effects of the global market, they sit down on the table and negotiate with government and we can negotiate areas in which we can a few adjustments here and there,” Mukanga said.
Exports of copper account for around 75 percent of Zambia’s exchange earnings, government statistics show.
A market analyst at RBC Capital Markets said recently: “Poor global economic growth prospects are weighing on metals. Significant excess inventories have accumulated, and capacity utilisation rates are well below full effect levels, pointing to a poor commodity pricing environment.”
Zambia produced 824 976 tonnes of copper in 2012 and Minister Mukanga said production is expected to rise to around 900 000 tonnes this year.
“The government target is 1.1 million tonnes by 2015 and I am confident that this will be met if we factor in new projects starting production,” Mukanga said.
Zambia says growth in the mining will be driven by Canadian miner, First Quantum Minerals’ Sentinel copper mine, which is expected to start production in mid-2014 with targeted output of around 130 000 tonnes annually.
Sentinel plans to then raise output to 300 000 tonnes per year, Vancouver-based First Quantum Minerals management says.
First Quantum’s flagship operation in Zambia is Kansanshi copper and gold mine, which is presently undergoing a phased expansion programme to raise output of copper to around 400 000 tonnes per annum from 2015.
Another project likely to drive up output is Lubambe, a joint venture between Johannesburg Stock Exchange-listed African Rainbow Minerals and Brazilian giant Vale.
Having started operations last year, they expect to reach annual production of 45 000 tonnes by 2015.
Minister Mukanga also said the government has set up a committee to reconcile mineral production figures to ensure the country is fully benefitting from its resources.
“We have put a committee in place to look at how best we can reconcile production figures to ensure that there is transparency in the way figures (mineral production) are reported,” Mukanga said.
The Zambian government is also going all out to woo investment by introducing an online mining exploration, licensing and registration system.
The Mines Ministry is currently conducting a trial run of the online registration and licensing system, which will be fully operational “soon”, Mukanga said.
“An online system will reduce the human element in licensing, registration and reporting systems for companies.
We think it will be easy to manage and will create transparency,” Mukanga said.
He said the private sector should assist the government to conduct geological mapping of the country, adding that 40 percent of Zambia’s mineral potential is not known.
“…we know generally that in Zambia every part of the country you find mineral deposits. We have a lot of potential for manganese, precious metals. We are a rich nation in terms of minerals deposits.”
Mukanga added that government would in future concentrate on “creating an enabling environment and to let the private sector concentrate on mining” as one way of boosting mining investment and job creation in the mining sector.