Africa’s second-largest copper producer, Zambia, faced a dual economic test in 2024: a mining sector grappling with post-litigation recoveries, operational inefficiencies as ore bodies declined, inconsistent exploration efforts, and an energy crisis exacerbated by severe drought and decades of underinvestment in power infrastructure. While the Democratic Republic of Congo (DRC) surged past 2.5 million metric tons of copper production annually buoyed by global decarbonization efforts. Zambia remained stagnant in the 800,000 metric-ton range, widening the gap between the two nations.
Contributing factors included past policy uncertainty, an unpredictable tax regime, and a 1,300 MW power shortfall that sent business sentiment into contraction territory. With Zambia’s Purchasing Managers Index (PMI) slipping below the 50-mark the threshold separating expansion from contraction the energy crisis underscored the nations over-reliance on hydroelectricity, which accounts for 85% of its generation capacity. Bureaucratic inertia and weak political will to cost-reflective tariffs, further destabilized by currency depreciation and a prolonged debt crisis, deterred investment in alternative energy sources such as solar, coal, and geothermal.
A Promising Outlook for 2025
Despite these headwinds, Zambia’s 2025 outlook appears more optimistic. Since January 1, improved rainfall patterns have begun replenishing reservoirs, with the Kariba Dam often referred to as the worlds largest battery seeing its usable capacity rise to 6.2%, up from a critical low of 3.1%, though still well below the 15% recorded a year ago. The severity of the crisis has catalyzed long-overdue reforms, including net metering, open-access policies, wheeling frameworks, expedited licensing, and, most critically, tariff adjustments, a prerequisite for attracting private capital into the energy sector. A cost-of-service study by London-based Energy Markets Regulatory Capital (EMRC) exposed inefficiencies in human capital management and suboptimal electricity pricing, highlighting the urgency of structural reforms by 2027 to alleviate financial pressures on Zambia’s state-owned power utility, ZESCO.
However, financing remains a significant obstacle. As a state-backed entity, ZESCO’s creditworthiness is intrinsically linked to Zambia’s sovereign rating, which remains in selective default on its long-term issuer obligations, limiting access to both domestic and international capital markets. Nonetheless, businesses are cautiously optimistic about improved power supply. Projections indicate a best-case scenario of 12 hours of daily electricity availability, while worst-case estimates range between five and seven hours, an improvement from the crippling 21-hour blackouts of 2024, which at times left entire regions without power for consecutive days. The ultimate outcome will depend on sustained rainfall and water inflows into critical hydro facilities such as Itezhi-Tezhi and Kariba, which collectively govern the Kafue and Zambezi basins through March.
Mining Growth Trajectory and Power Constraints
Despite energy challenges, Zambia’s copper production expanded by 12% in 2024, reaching 820,670 metric tons. This growth was fueled by the restart of key mines, including Barrick Gold’s Lumwana operation and Vedanta Resources Konkola Copper Mines. Additionally, Mopani Copper Mines, recently acquired by UAE-based International Resources Holding, played a pivotal role in driving output gains. While these developments mark a positive trend, power shortages remain a bottleneck for sustained mining expansion.
In 2024, approximately $6 billion in capital expenditure was committed to large-scale mining projects, including: Kansanshi S2 (First Quantum Minerals), Super Pit Expansion (Barrick Lumwana), Luanshya Copper Mines (China Non-Ferrous Corporation), Mingomba Mine (KoBold Metals), Lubambe Mine (China Jiangxi) and the Fishtie Project (JV between First Quantum Minerals and Partners), Konkola Copper Mines (Vedanta Resources) and Mopani Copper Mines (International Resources Holdings)
Positioning for the Future
Zambia’s Minister of Mines, Paul Kabuswe, remains optimistic that the country could achieve the long-coveted 1 million metric ton production milestone by the end of 2025 two years ahead of the previously projected 2027 target. However, realizing this ambition hinges on securing a stable baseload power supply. Another pressing issue is Zambia’s growing artisanal mining sector, which, if formalized through proper licensing and financial support, could accelerate copper output growth.
Speaking at a Zambia National Commercial Bank (Zanaco) sponsored event on the sidelines of the 2025 Mining Indaba in Cape Town, leading economist and Zanaco board chairman, Professor Oliver Saasa, urged policymakers to integrate artisanal miners into the formal economy. He emphasized that structuring financing mechanisms for these small-scale operators could be a game-changer, unlocking latent copper production potential.
Global Copper Outlook and Zambia’s Strategic Position
Against the backdrop of a global copper deficit and accelerating demand driven by electric vehicles, renewable energy, and expanding warehouse capacity in Asia, copper fundamentals remain bullish. Medium- to long-term price forecasts suggest copper could trade between $10,000 and $12,000 per metric ton on the London Metal Exchange.
For Zambia, this is a critical inflection point. As the nation navigates its fiscal recovery post-debt restructuring, a robust mining sector remains the cornerstone of economic revival powering downstream industries, including energy, small and medium enterprises (SMEs), manufacturing, real estate, and logistics. Sustainable economic growth will require not only increased copper output but also a stable and diversified energy sector capable of supporting industrial expansion in the years ahead.
Zambia will seek to grow is economy by 6.2% in 2025 driven by a stronger mining and agriculture sectors post drought effects. The Southern African nation restructured $3 billion worth of dollar bonds in 2024 for which recovery scenarios will be supported by a thriving mining sector. Zambia sees a second International Monetary Fund deal post expiry of the 38 month extended credit facility in October of this year.
The Kwacha Arbitrageur