Value addition and export of finished products can offer significant cover for Africa’s red metal producer in times of plummeting copper prices.
Cape Town (BT) – Value addition in the mining sector is vital if Zambia is to hedge the impact of metal price volatility on the international market, Stanbic Bank Zambia Chief Executive Leina Gabaraane said on the sidelines of the ongoing 25th mining indaba.
Mining contributes circa. 12% to gross domestic product (GDP) and earns the southern African nation over 75% of its export proceeds. The sector stands as the largest private sector employer in the country the largest being the state.
Zambia is always adversely impacted by plummets in metal prices on the London Metal Exchange (LME) , especially copper as the nation lacks adequate economic buffers to absorb vulnerabilities from economic downturns.
Zambia’s heavy dependence on the export of raw mineral resources entails that our economy is highly sensitive to any changes in mineral prices on the international market.
Shock waves from a fall in the cost of copper on the LME are transmitted in the economy as it dents export earnings and foreign exchange flows, which in turn affects the exchange rate, Gabaraane said.
Gabaraane talks beneficiation
A thriving minerals processing industry will go a long way in promoting economic stability, as the market for finished products is less susceptible to huge fluctuations in commodity prices. An added advantage of mineral beneficiation aside from increased forex inflow is the creation of more employment opportunities in the processing industry which may have a positive impact on poverty reduction,” he said.
Zambia’s largest bank will be exploring avenues to stimulate growth in the processing industry through investment funding so that the country can widen its export base as opposed to focusing more on raw materials.
Insufficient investment in mineral beneficiation has been a persistent problem for many mineral-rich countries in Africa which Stanbic has committed to correcting for Zambia. Several countries spend billions each year to import products processed from the raw materials produced within their borders thus vastly limiting their GDP growth as well as currency stability.
In his opening remarks at the 2019 Mining Indaba, South Africa’s Minister of Mineral Resources Mr. Samson Gwede Mantashe said Africa’s mineral wealth can serve as the cornerstone for prosperous and diversified economies not dependent on the export of unprocessed minerals.
He noted that it was imperative for African countries to quickly recognize the possibilities and investment opportunities in mineral processing and divert more resources to develop downstream and input industries.
“Previously, limited access to finance had stifled growth in the extractive industry as well as its sub sectors,” Gabaraane said. “Now Stanbic stands ready to fill this gap while also providing working capital to green field projects.
We recognize the significance of mining to the local economy hence we will continue to look for ways to increase our contribution to the sector’s growth and maximize the country’s benefit from it – Because Zambia is our home, we drive her growth.”
Stanbic Bank Zambia is one of the biggest players in Zambia’s mining industry, with over $3 billion invested in the sector so far.
