Zam­bia re­fined cop­per out­look pos­i­tive...

Zambian Business Times - - FRONT PAGE -

ZAM­BIA will re­main one of the fastest-grow­ing re­fined cop­per producers in the world over the com­ing years, ow­ing to strong do­mes­tic smelt­ing ca­pac­ity, ris­ing mine out­put and con­tin­u­ing gov­ern­ment sup­port, ac­cord­ing to eco­nomic re­search com­pany BMI Re­search, a mem­ber of the Fitch Group.

As the cop­per mined in Zam­bia is re­fined lo­cally be­fore be­ing ex­ported, Zam­bia – un­like other mar­kets in the re­gion – will re­main a re­gional player and an im­por­tant global player in re­fined cop­per, BMI notes in its In­dus­try Trend Anal­y­sis ti­tled ‘Pos­i­tive Re­fined Cop­per...

ZAM­BIA will re­main one of the fastest-grow­ing re­fined cop­per producers in the world over the com­ing years, ow­ing to strong do­mes­tic smelt­ing ca­pac­ity, ris­ing mine out­put and con­tin­u­ing gov­ern­ment sup­port, ac­cord­ing to eco­nomic re­search com­pany BMI Re­search, a mem­ber of the Fitch Group.

As the cop­per mined in Zam­bia is re­fined lo­cally be­fore be­ing ex­ported, Zam­bia – un­like other mar­kets in the re­gion – will re­main a re­gional player and an im­por­tant global player in re­fined cop­per, BMI notes in its In­dus­try Trend Anal­y­sis ti­tled ‘Pos­i­tive Re­fined Cop­per Out­look Ahead for Zam­bia.’

With an es­ti­mated out­put of 582 000 t of re­fined cop­per this year, Zam­bia’s down­stream cop­per pro­duc­tion is the largest in Africa, ahead of other com­pet­ing cop­per producers such as the Demo­cratic Congo Repub­lic and South Africa.

BMI fur­ther fore­casts Zambian re­fined cop­per pro­duc­tion to in­crease from 582 000 t in 2018 to 865 000 t in 2027, av­er­ag­ing a solid pro­duc­tion growth of 4.5%, the fastest of any ma­jor global pro­ducer, ex­cept for In­dia. “As a re­sult, we ex­pect Zam­bia to jump from the tenth-largest re­fined cop­per pro­ducer in the world to eighth largest over the same pe­riod.”

BMI fur­ther sug­gests that Zambian re­fined cop­per pro­duc­tion will be driven by a num­ber of mod­ern smelters at key oper­a­tions. Zam­bia has a to­tal of four cop­per smelt­ing oper­a­tions, giv­ing it a com­bined smelt­ing ca­pac­ity of up to 1.2-mil­lion tons of re­fined cop­per a year, the largest in Africa.

Key play­ers ac­tive in the do­mes­tic cop­per mar­ket in­clude di­ver­si­fied min­ing com­pany Vedanta Re­sources, Cana­dian me­tals and min­ing com­pany First Quan­tum Min­er­als (FQM) and di­ver­si­fied miner Glen­core, all of which have ramped up in­vest­ments in de­vel­op­ing down­stream oper­a­tions over the past decade.

For in­stance, Vedanta’s Konkola cop­per mine Nchanga smelter was com­mis­sioned in 2008, while the Mopani mine smelter was com­mis­sioned in 2006 and un­der­went a re­build in 2014, BMI says.

Most re­cently, FQM in­vested more than $800-mil­lion to de­velop the Kan­shan­shi smelter, which came into pro­duc­tion in De­cem­ber 2014, with a ca­pac­ity of 300 000 t/y.

BMI’s fore­cast for Zambian mine out­put to wit­ness con­sid­er­able growth this year will also feed into down­stream services, fur­ther sup­port­ing short-term re­fined pro­duc­tion. “Our out­look for Zam­bia’s min­ing sec­tor in 2018 re­mains pos­i­tive, as cop­per prices con­tinue to rise and the coun­try’s elec­tric­ity sup­ply im­proves,” BMI says.

De­spite cop­per prices suf­fer­ing a de­cline, in re­cent weeks as a re­sult of height­en­ing trade war ten­sion, BMI main­tains its bullish cop­per price fore­cast of $7 000/t for this year. It fur­ther ex­pects a per­sis­tent global un­der­sup­ply to keep prices on an up­ward tra­jec­tory. Tail­winds to Zam­bia’s min­ing sec­tor in­clude higher dam-wa­ter lev­els achieved in the coun­try so far this year, which will likely re­duce the pos­si­bil­ity of power short­ages in the com­ing months.

As part of Zam­bia’s sev­enth Na­tional De­vel­op­ment Plan for 2017 to 2021 and Vi­sion 2030, gov­ern­ment will aim to pro­mote lo­cal and for­eign par­tic­i­pa­tion higher up the value chain through the man­u­fac­tur­ing of fin­ished cop­per goods for use in the elec­tri­cal, au­to­mo­tive, plumb­ing and aqua­cul­ture in­dus­tries, be­sides oth­ers, BMI also notes.

As a re­sult, BMI ex­pects Zam­bia’s down­stream cop­per in­dus­try’s share of gross do­mes­tic prod­uct to grad­u­ally in­crease over the com­ing years, while the con­tri­bu­tion of raw min­ing to the to­tal econ­omy de­clines.

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