Market and product
Zambia, new star in copper production
This hope has been reinstated by the government this week by announcing that Zambia’s mines are expected to show strong performance over the long-term due to rising metals prices.
Zambia is internationally recognised as a major producer of copper and cobalt. Zambia is ranked as the world’s seventh largest producer of copper, generating 3.3% of the western world’s production, and world’s second largest producer of cobalt (19.7%).
Zambia has a history of gold mining on a relatively small scale, with the twenty larger deposits having produced a total of slightly more than 2t of gold since modern mining began in 1902.
For the past sixty years the Zambian economy has been heavily reliant on the mining of copper and cobalt and despite the positive steps taken to diversify the industrial and manufacturing base, the reliance remains. The mining sector contributed US$822 million to the total export.
This week, Zambia’s mines minister Maxwell Mwale told mediapersons that future of copper mining appeared very promising as the price of the metal, used extensively in construction and wiring, was expected to remain high over the long-term due to increasing demand.
Copper hit $7,527 a tonne last week, its highest peak since April 27, as fears of a double dip downturn and European sovereign debt eased, while demand expectations improved.
Analysts say Zambia’s mineral royalty at 3.0 percent is favourable compared with others of around 5.0 percent. Corporate tax is charged at 25 percent and profit variable tax at 15 percent.
Zambia has continued to attract investment to lift output to a 750,000 tonnes target in 2010 and 1 million tonnes by 2012, with $5 billion ploughed into the mining sector — its economic lifeline — in the last eight years.
In June, a ationwide power blackout had forced copper mines in Zambia to halt output.
Power blackouts are frequent in Zambia, and have been a big concern for the chamber of mines and for foreign mining companies who own most of the key mines in the country’s copperbelt province.
Frequent power stoppages are likely to affect Zambia’s plans to increase its copper production to 1 million tonnes next year, from just below 700,000 tonnes in 2009, analysts said. The country has been trying to entice new investors to the sector as demand for the metal increases.
(Source: www.commodityonline.com, By Geena Paul)
