Africa’s second largest copper producer Zambia has continued to make strides in the areas of exploration and expansion investments in its mining sector. Marketing the Southern African nations potential in rare earth and other green metals to support the global climate risk mitigation agenda, President Hakainde Hichilema in his key note speech echoed a different message to one he delivered in 2022 at the Cape Town mining indaba.
“This year Zambia comes with a new message; invest with confidence and power the future. We reiterate our governments commitment towards making Zambia a reliable investment partner of choice. Zambia has a reliable, stable and predictable legal, mining, regulatory and fiscal regime. As we committed to you during the 2022 indaba we have resolved the legacy issues that we inherited when we took over public office at Mopani and Konkola Copper Mines. We express our gratitude to International Resources Holding and Vedanta Resources for the combined $2.3 billion to fulfil potential,” President Hichilema said. The Cape Town investing in Africa mining symposium is taking place under the theme embracing the power of positive disruption for a bold new future for African mining.
REVELATION OF THE LAST TWO YEARS
President Hichilema has in the last two years effected a stable mining tax regime that has seen an influx of investment in both exploration and expansions by market players. In the period Zambia has seen a $100 million investment in the Enterprise Nickel operation, the largest on the continent, First Quantum Minerals (FQM) strong progress on the S3 expansion at Kansanshi with a billion dollars of investment, the Moxico development at its Mimbulu mine which has to date done 6,000 metric tons over the last 9 months of operations, Kobold Metals which has make significant strides in exploration using Artificial Intelligence with the $150 million investment in 2022, doubling down of Barricks $2 billion investment into a super pit mine with annual capacity of 240,000 metric tons, the $1.3 billion pledged $1.3 billion investment by China Non Ferrous Metals in addition to the $600 million investment in revamping of its shaft 28 at Luanshya Copper Mines. As at more recently, Zambia assumed top slot as the worlds largest producer of gemstones such as emeralds after Brazil. The Southern African nations gemstones are run by Gemfields who are in partnership with the government at the Kagem mine in Lufwanyama district on the Copperbelt part of the country.
REORGANIZATION AHEAD OF COPPER RALLY
Zambia’s strides to sanitize its mining house was epitomized by an impasse resolution between Vedanta Resources and ZCCM-Investment Holdings Plc over Konkola Copper Mines and the signing on of, Abu Dhabi based International Resources Holdings , an equity partner for Mopani Copper Mines to scale production to optimal levels. The two mines at full capacity have potential to add 630,000 metric tons to the red metal producers production capacity. Both investors have pledged recapitalization of the mines and have commenced liquidation of outstanding obligations to suppliers as they gear up for production ramps. IHC Resources signed an equity partnership deal book valued at $1.1 billion which it is set to invest into the Mopani operation while Vedanta pledged to invest $1.3 billion over 5 years to revamp the idle mine to access the rich deposit.
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Zambia is seeing an influx of capital in the mining faculty which for analysts is a barometer for growth pulse especially at a time the London Metal Exchange prices ready for a steroid streak in the medium to long term supported by rising demand from decarbonization momentum and a forecast deficit from some mine closures and production trims globally. Other drivers of copper rally demand include military demand as a de-globalized world has higher copper bullet and shells appetite.
TAKING STOCK USING ADVANCED TECHNOLOGY
President Hichilema pronounced the $160 million geo-mapping of the country’s geo-data to aid with a more accurate stock take of mineral inventory using more advanced technology in the quest to improve the Zambia economic production possibilities. As Zambia’s chief marketing and investment officer, President Hichilema resounded mining diversification through exploration opportunities in rare earth, lithium, sugelite, manganese, cobalt, gold and diamonds. The green metals remain critical to Zambia’s contribution to the global climate risk intervention agenda both through the electric car and renewable energy eras.
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MINING OUTLOOK GIVES ENERGY A POSITIVE CUE
As mining is set to scale higher energy and transport are part of Zambia’s agenda as enablers to the expansionary cause. Zambia has invested in power generation with the most recent being the $2.2 billion Kafue Gorge Lower while talks around reducing transportation distance for copper to ports by over 1,560 kilometers, through the Lobito rail line connecting the Copperbelt of Africa to Angolan ports, have reached an advanced stage. Other key milestones in the renewable energy sector include the debut Copperbelt Energy Corporation Plc $200 million green bond whose first tranche of $57 million was (x178) oversubscribed. Proceeds will go towards solar, wind and other renewable generation sources. The copper producer has opened its energy markets for investment with offtaker guarantees proposed. The mining sector has historically consumed 55% of the grid which aligned with Zambia’s 2032 prospects of hitting 3 million metric tons will require additional generation capacity.
“We stand on the verge on the greatest energy revolution seen since the industrial revolution for which the world see’s 9 million metric tons by 2040,” President Hichilema said.
INVEST TO POWER A GREEN AFRICA FUTURE
Zambia’s head of state called for investment partnerships to power the green African future helping it to meet climate targets. Zambia will continue to expand its value chains through execution of running memorandum of understanding such as one between the Democratic Republic of Congo, Zambia and the United States for the production of electric car batteries locally. President Hichilema asked financiers to invest in ambitious projects, technology companies to aid with geo-mapping and energy firms to boost infrastructure to support the mining agenda. Zambia in 2023 signed two MOU’s with DRC and with the US on the side lines of the Africa Heads of State visit to the United States.
LAST YEAR WAS CHALLENGING FOR MINING
The year 2023 was marred by operational hurdles that saw copper production flirt with 10-14 year lows slightly below the 800,000 metric ton average. Mines grappled with fading ore bodies which triggered greater investments but waned production in the period. Key mines were not fully operational as they were either in the middle of impasses as in the case of Konkola Copper Mine or where in search of equity partnerships to help capitalize as was in the case of Mopani. Other factors waning production include environmental constraints such as excessive rainfall that halted operations in the Northwestern part of the country and at sea ports impacting export logistics in the first quarter of 2023. Now that most operational issues are out of the way Zambia is set to post benefits of renewed posture in the sector with a rebound forecast after 2025.
OPPORTUNITIES OUTSIDE DEBT RESTRUCTURE
Still in the labyrinth of a debt restructure following protraction fueled by comparability concerns between bilateral and bondholders, the Southern African nation has continued to seek economic revamp opportunities through anchor sectors such as mining. President Hichilema’s regime has prioritized the debt revamp quagmire to address fair pricing of capital which currently could be hampered by wider sovereign risk premiums. Despite the fiscal hurdles, Zambia continues to post resilient growth north of 4.4% on average as authorities seek to outgrow its overhang obligations. The red metal producer is 16 months into an International Monetary Fund extended credit facility to help with balance of payment support. Mining remains anchor to Zambia as it accounts for 70% of foreign exchange revenues and has direct implication on the country’s exchange rate while downstream business has traditionally powered the Southern African nations small to medium sized enterprise business for many years.
Zambia is represented by a delegation led by Mines and Finance Ministers, Special Assistant to the President for Economic Affairs, banks namely Zambia National Commercial Bank Plc, Stanbic, First National Bank and Standard Chartered in addition to energy entities such as Copperbelt Energy Corporation Plc and Africa GreenCo. Other players include the celebrated Kobold Metals, Chamber of Mines, ZCCM-Investment Holdings Plc and Law firms such as Chibesakunda and Company to mention but a few.
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