Copper is still the most important economic driver in Zambia. It provides jobs, business opportunities in the supply chain, and necessary tax income. And the many significant developments to Zambia’s mining sector within recent months could mark a transformative period for her. The New Dawn Government’s aim is to increase copper output substantially but with few visible results so far. The output has dropped from 880,000 metric tons in 2021 to 760,00 metric tons in 2022. Having said that, the sector is clearly gearing up for a promising future, from policy decisions to strategic investments. How will this affect the sector’s performance going forward? Let’s delve into some key highlights that underscore Zambia’s progressive approach in the mining industry.
One of the pivotal moments was the celebration of the 25th anniversary of the China-Zambia joint venture, Non-Ferrous Corporation Africa Mining PLC (NFCA). This joint venture, operating in the Chambisi district in the Copperbelt, marked a quarter-century of successful operations. At the end of September this year, NFCA announced plans to invest $400 million, a testament to their commitment to the region. This significant investment aims to boost annual copper production to 110,000 tonnes, contributing to the local economy by creating jobs and fostering sustainable development. In total NFCA wants to invest up to USD 1.3bln, which includes a USD 600m investment for the reopening of the shaft 28 at the Luanshya Copper Mine. [1]
Zambia’s mining sector is not only a cornerstone of its economy but also a driving force behind global climate change mitigation efforts. Metals and minerals play a crucial role in low-carbon technologies like wind turbines and electric vehicles. Challenges loom in the form of supply-demand imbalances, particularly concerning copper, lithium, and boron, which could lead to price fluctuations. Addressing these challenges is vital for maintaining a stable market environment.
Barrick, a leading mining company, is investing $2 billion in expanding the Lumwana mine. This initiative not only bolsters Zambia’s copper industry but also aligns with the government’s vision for economic growth. The expansion project aims to increase Lumwana’s annual copper production to an impressive 240,000 tonnes. Barrick’s emphasis on local employment and its substantial contributions to Zambia’s economy, nearly $3 billion since 2019, showcase their dedication to the nation’s prosperity.
In a significant decision, the Zambian government, under President Hakainde Hichilema’s leadership, welcomed Vedanta back to the Konkola Copper Mines (KCM)[2]. Vedanta’s return involves a substantial investment of $1 billion aligns with Hichilema’s ambitious goal to triple Zambia’s copper production to over 3 million tonnes annually within this decade. Vedanta’s commitment to supporting local creditors and enhancing mine worker salaries reflects their dedication to sustainable development. The Parties have wrangled a lot over this deal but have finally put ink to paper as we are sending out this blog, with all the details to be announced over the coming days and weeks. Most importantly, the decision has been made and the ownership structure is clear now and should pave the way to increased investment and productivity of KCM.
The jury is still out on Mopani Copper Mine, one of Zambia’s large copper producers. There seem to be two serious bidders for the mining operation out of Kitwe. Sibanye Stillwater, a prominent player in the mining industry, has put up its hand publicly a while ago. It planned to collaboration with a Chinese investor for the Mopani Copper Mines bid, showcasing international partnerships that can drive the sector forward. According, to the Financial Times[3], IHC — the UAE investment holding company — has put its hat in the ring via a subsidiary called IRH. It has promised to keep nearly full employment at the mine, whereas the Sibanye proposal would involve job cuts. Whatever the results will be, insiders do expect a resolution before the end of this year.[4] [5] [6]
The US mining exploration firm, KoBold Metals, who have already invested USD 150m in exploration of the Mingomba site this year, are very positive on their Zambian mining investment. Kurt House, KoBold’s CEO, claims that they are sitting on a vast deposit that will be able to power over 100m electric vehicles[7]. KoBold Metals notable shareholders include Bill Gates, Jeff Bezos, Mike Bloomberg and Mitsubishi Corporation. It uses AI in the exploration process, which it claims reduces the cost of exploration by 40 times. [8]
It must be clear that many deals have not closed yet and that there are still uncertainties around some of the transactions, the outlook seems to have improved. It would be crucial for Zambia’s economy, its workforce, the tax income and ultimately believe that an African government can turn a mediocre performance around and execute a strategic plan that benefits the country for decades do come.
[1] http://mines.org.zm/cnmc-to-invest-us1-3bn/?doing_wp_cron=1699101849.2865469455718994140625
[2] https://www.reuters.com/markets/commodities/zambia-agrees-hand-disputed-copper-assets-back-indias-vedanta-2023-09-05/#:~:text=LUSAKA%2C%20Sept%205%20(Reuters),when%20authorities%20seized%20the%20mines.
[3] https://www.ft.com/content/70551b68-b964-4306-96f4-c4cdf7e1c9cb
[4] https://www.miningmx.com/news/platinum/54851-sibanye-stillwater-may-be-outbid-for-mopani-copper-amid-pgm-pain/
[5] https://www.reuters.com/world/africa/sibanye-says-still-race-zambias-mopani-copper-mine-assets-2023-08-29/
[6] https://www.reuters.com/markets/commodities/zambia-decide-new-mopani-copper-mines-investor-october-source-2023-10-10/
[7] https://www.bloomberg.com/news/videos/2023-11-02/china-s-grip-on-africa-sparks-a-us-response
[8] https://www.reuters.com/world/africa/billionaire-backed-kobold-metals-invest-zambia-copper-mine-2022-12-14/
