Copper output needs urgent tonic as metal prices rise

As copper prices hover around $8,500 per tonne, Zambia should galvanise mining companies into boosting production for the red metal and leverage on the attractive prices that are likely to continue on the growth trajectory.

It is therefore imperative for the country to quickly bring the mining power houses – Konkola Copper Mines (KCM) and Mopani Copper Mine – back on stream so that the projected copper output is attained. The Zambian government has set an ambitious target of three million tonnes per year in the next 10 years, which feat requires stuttering mining companies on the Copperbelt to quickly get back on track and complement production efforts of other mining companies in the North-western province.

Edward Simukonda, a mine expert, urged the government to quickly resolve issues at Mopani and KCM so that Zambia can hit an annual three million tonnes of copper output in the next 10 years as envisaged.

“These two issues should be looked into so that production starts shooting. If not, I see a very bleak future for us. There is so much to look at. We need to have enough operating equipment and we also need to have capacity to buy new equipment,” he noted.

Mr Simukonda noted that the two mining companies are critical to Zambia’s quest to stoke up production, hence the need to have them back to run at 100 per cent capacity. The mining expert also believes that it is time for the country to bolster operations in the mining sector as latest technology demands the use of copper in many more components.

In Europe, copper is fetching $8,554.85 per tonne while in China on the Shanghai Future Exchange it is going at $9,555 per tonne. With demand rising for copper in the manufacturing of components for Electric Vehicles (EV) and also in the construction and other industries, prices on the international market are poised to continue rising.

But Chingola Chamber of Commerce and Industry has decried the prolonged negotiations over the issues surrounding KCM and has thus called on government and Vedanta Resources Plc to settle the matter quickly. Chamber president Freddie Musonda said in response to a media query that contractors are still owed money, a situation which has negatively impacted their operations.

“The unfortunate negative scenario of KCM is that contractors continue to be owed money that they can use on the tax amnesty payment period given by the Zambia Revenue Authority. The mines are surviving on funding solicited from contractors’ services which they do not pay for,” he explained.

Mr Musonda called for a win-win outcome at KCM so that contractors can once against get back to glory in a sustainable manner. He noted that mining contractors and suppliers will only thrive if they are fully paid their dues and also if the mining companies fire back to full life.

Many experts including Private Sector Development Association president Yusuf Dodia have called for the quick resolution of matters surrounding Mopani and KCM to enable the country earn sufficient revenue from copper exports. Mr Dodia believes that time is now for Zambia to regain its glory in the mining sector given the expected high demand for the red metal in the manufacture of EV components.

He said in an interview that Zambia must take strategic decisions in the mining industry even as the government emphasises economic diversification.

There has been rising hue and cry about the state of Zambia’s two mining power houses in which government has a stake. Two years ago, Glencore Plc, a Swiss multinational trading and mining company, sold 73 per cent stake in Mopani to ZCCM-IH for $1.5 billion. Glencore also got the off-take rights to buy all copper produced by Mopani until the debt is paid in full but the company has been struggling and needs recapitalisation to the tune of $300 million.

On KCM, government has been negotiating with majority shareholder Vedanta after opting to resolve the ownership issues out of court. The giant mining company was placed under receivership in June 2019. However, other mining companies are performing well such as First Quantum Minerals Limited (FQM)’s Kansanshi Mining Plc in Solwezi which produces copper and gold and FQM Trident Limited in the neighbouring Kalumbila district in the North-Western Province.

In Kitwe, Mufulira, Chingola and Chililabombwe many businesses and individuals who depend on mining operations for business and sustainability have been negatively affected by the below par performance at KCM and Mopani. Bernard Chitalu of Kitwe has called for quick subvention to Mopani and KCM so that the two companies can resume robust operations and redeem fortunes on the Copperbelt and elsewhere. Mr Chitalu said in an interview that many Small and Medium Enterprises (SMEs) have collapsed because they were unable to get business from the two flagging mining companies.

Recently, mines and minerals development minister Paul Kabuswe announced in Chililabombwe that the Government and Vedanta had almost concluded negotiations and that details will be availed to the public as soon as all partners, including the unions are fully briefed.

“We have finished negotiating and we will be briefing unions as the matter has to go through some stages including Cabinet before we inform the nation about the outcome. We mean well for this country.

“Mining in particular is critical and we want to ensure that we do a good job. We know the process has taken a little bit longer, but it is necessary for us to ensure that the parties involved are satisfied,” the minister said.

Vedanta has pledged to invest $1 billion into KCM’s capital development and boost production to 200,000 tonnes from the current levels which range between 50,000 and 100,000 tonnes per annum.

In total, Vedanta Resources invested US $3 billion towards KCM development, expansions and upgrades of the KDMP, state-of-the-art smelter and Nkana Refinery expansion. Other developments were the concentrator at Konkola, two new concentrators at Nchanga, second cobalt recovery furnace and the upgrade of mining plants and equipment. Additionally, Vedanta has entered into a joint venture with Faxconn on a 60-40 per cent equity arrangement in the State of Gujarat in India to set up a mammoth semi-conductor manufacturing plant and a testing unit ad desirous to contribute greatly in the manufacturing of EV components.

Zambians, including captains of industry, are highly expectant of government’s final decision on Mopani and KCM. It is imperative, therefore, for the state to expedite the process so that production can boom in the mining sector and ultimately earn sufficient revenue from copper sales at attractive price levels.

Africa’s highest copper producer, DRC, produced an estimated 2.3 million tonnes of the base metal in 2022, representing a more than six-fold increase in the country's copper production since 2010.

Zambia, in the second position, produced 763,287 metric tonnes of copper in 2022, a drop from 800,696 tonnes which was produced in the preceding year.

Therefore, the country will need to scale up production by resuscitating operations at KCM and Mopani.