Zambian copper production to grow by 7% this year, despite power challenges
JOHANNESBURG (miningweekly.com) – The Zambian government’s support for the mining industry and strong copper prices are expected to drive growth in the country’s copper production for this year, despite ongoing power shortages.
BMI Research on Monday pointed out that, according to data published by the Zambian central bank, Zambia’s copper production reached 362 000 t by June 30, down slightly from the 367 000 t produced in the first half of 2016.
“No details have been given by the Zambian authorities on this decline, but it is likely that Zambia’s ongoing power supply problems have been the key constraint on copper mining activities,” BMI said.
“We are positive on Zambian copper and maintain our forecast of 7% growth this year as Zambian President Edgar Lungu remains supportive of the sector, and rising copperprices incentivise domestic miners to ramp up production during the second half of the year.”
Ongoing power shortages resulting from the country’s dependence on hydropower and rising water tariffs are the key risks facing the Zambian mining sector moving forward.
In August, two of the country’s biggest copper producers, Glencore and First Quantum Minerals, were forced to reduce power at key operations, owing to tariff disputes with electricity provider Copperbelt Energy Corporation.
However, improving rainfall and rising dam levels in the country will ease some of power shortages experienced in recent quarters.
Another key driver of strong Zambian copper production this year will be the positive trajectory of prices in 2017 relative to last year.
Since touching lows of $4 500/t in June last year, copper prices have risen over 57% to $6 810/t in August owing to strong demand from China.
“While it is possible that prices may unwind from current levels towards the end of the year, we think the gradual uptrend over the last 12 months will bode well for mining activity in Zambia.
Source: Mining Weekly
AfDB welcomes Zambia, Ghana to bond index
The African Development Bank (AfDB) has added Zambia and Ghana to its African Bond Index (ABI), expanding the index to the eight most liquid sovereign bond markets in Africa.
The ABI provides investors with a tool with which to measure and track the performance of Africa’s bond markets.
The composite index now comprises South Africa, Egypt, Nigeria, Kenya, Botswana and Namibia local currency sovereign indices, with Ghana and Zambia joining this month.
“More African countries are increasingly looking to domestic capital markets to source much-needed financing for economic development. We expect to include more countries to [the ABI] as soon as reliable pricing information is made available,” said AfDB financial sector development director Stefan Nalletamby.
The ABI is managed in collaboration with the African Financial Markets Initiative, which works to deepen the continent’s local currency bond markets, while creating an environment where African countries can access financing at variable terms.
Meanwhile, in December, the AfDB approved the creation of the first African multijurisdictional fixed-income enhanced exchange-traded fund – the African Domestic Bond Fund (ADBF) – which will track the performance of the ABI. The ADBF is expected to be launched in September.
Source : Engineering News
Lacklustre mineral laws costing Zambia dearly
Lusaka – Zambia, like other countries endowed with mineral resources, is losing an estimated US$1 trillion in revenue annually due to investors harbouring corrupt deeds.
This is contrary to the resolution made by Southern African Development Community (SADC) recently calling upon all 15 member states, endowed with vast mineral resources to promote equal share of proceeds (beneficiation) with the investors they harbour.
According to Zambia Extractive Industry Transparency Initiative (EITI), the country’s quest to be world leader in copper production is being frustrated by some unscrupulous company owners using Zambia’s laxity in mining laws to exploit the country.
And they are involved in acts of corruption and illegal deals, resulting in the country losing an average US$1 trillion annual in unsecured revenue.
Zambia is presently ranked seventh among the top 10 copper producers globally and is competing with other countries including Chile and China.
But the shortcomings in legislations laws to keep in check those flouting the law are costing the country dearly, the EITI says in its report.
The 51-member EITI findings show that Zambia the situation is compounded by delays to review the Mines And Minerals Act and compel the mining companies that have invested in the country to disclose who are the rightful owners.
This lacklustre in legislations has resulted in some illegal and corrupt deals including transfer pricing of the minerals mined in the country.
The findings suggest that there is need to review legislation or the country may probably lose more in revenue given the latitude extended to mine owners.
An urgent review of the Mines and Minerals Act if expedited EITI said will ensure beneficial owners of such companies are identified and will assist in curbing the vice that is not only rife in Zambia but rampant in many mineral extractive countries.
Siforiano Banda, the head of EITI at a recent stakeholders meeting noted that there is need to review the law and curb the practices that were ‘robbing’ the country of much needed revenue.
“The lack of access to beneficial ownership information of key players in the extractive industry by law enforcement and other competent authorities is a significant impediment,” Banda says.
He said this lack of vital information, made it impossible for authorities not knowing or being able to trace some of the dubious activities.
“There is need to empower the relevant authorities and assist them to identify the actual owners of the companies or indeed the persons who are responsible for such activities for onward action,” he said.
Financial institutions that are essential in the fight include banks, which have the information of actual beneficial owners and can assist prevent the misuse of corporate vehicles in the financial system.
Many countries, including Zambia, face various challenges when implementing measures to enable the availability of accurate beneficial information.
These are in addition to legal owner of the corporate vehicle as it is not collected and sufficiently verified at the time the corporate vehicle or crime is committed or at any stage throughout its existence.
“This frustrates the efforts of law enforcement and other competent authorities to follow the money in financial investigations that involve corporate vehicles.” Banda added.
SADC Heads of States at their annual summit held in Victoria Falls in 2014 resolved that member states needed to devise laws that ensure mineral beneficiation to bolster domestic economies.
Source – The Southern Times