Zambia Plans To Increase Copper Production But Faces 3 Problems

At the recent African Mining Indaba, Zambian President Hakainde Hichilema stated that Zambia seeks to ramp up copper production from 830,000 tons per year to 3 million tons.

A recent mineral exploration supports this plan as KoBold Metals, an AI-powered mining exploration startup, announced the largest Zambian copper deposit discovery in over a century.

Copper constitutes a significant portion of Zambia’s annual revenue, with exports contributing over $6 billion. The nation, second only to the Democratic Republic of Congo in African copper production, is keen on leveraging its copper industry for economic growth.

Still, this country, a key player in the African copper mining industry, faces significant challenges in this effort. A recent report by the London School of Economics International Growth Centre (IGC) sheds light on the issues, including declining ore quality, energy supply issues and uncertain fiscal policies.

Now Read: First Quantum Awaits General Elections In May, Maintains Hope For Cobre Copper Mine

The first major concern is the declining quality of copper grades, particularly in the Copperbelt province. Among the ten copper mines, large mines like Kansanshi (majority owned by First Quantum FQVLF) and Chibulma (majority owned by Jinchuan Group JGRRF) have experienced ore grade decline. The report suggests that efficient mineral mapping systems are essential to combat this issue and ensure the industry’s sustainable development.

Energy supply poses another challenge, with Zambia heavily dependent on hydroelectric plants for 80% of its electricity. Changing weather patterns due to climate change affect hydroelectricity generation, impacting the mining sector’s energy needs. The report recommends exploring alternatives like solar power, given Zambia’s proximity to the equator.

Fiscal policies, especially tax regimes, also contribute to the challenges mining operations face in Zambia. The country has experienced uncertainty in its taxation policies, affecting investor confidence. Learning from successful fiscal reforms in Chile could provide insights into stabilizing Zambia’s tax environment.

The current focus of Zambia’s mining industry is primarily on extraction and early-stage refinement. The country looks to address challenges to fully capitalize on downstream activities and move up the global value chain, particularly as the government tries to negotiate higher state participation in future projects, as stated by Mines Minister Paul Kabuswe and reported by Reuters.

The government seeks to enhance revenue and ensure social impact without discouraging potential investors, which is a delicate balance to achieve.

Also Read: Uranium Surge Revives Old Mines, Sparks Mergers Across Sector

Image: Shutterstock