29 January 2013

Zambia: Solve Copper-Processing Puzzle

opinion

ZAMBIA is on course to becoming one of the world's top copper producers and with the massive investments being experienced in the local mining sector, it is anticipated that the country will hit 1.5 million tonnes by the year 2015.

It is also hoped that with such an achievement in the next three years or so, Zambia will move to the world's top five producers whose pack is currently led by Chile, USA, Peru, China, Indonesia, Australia and Canada in that order.

Ranked eighth on the globe's copper producing ladder, the country which has just had about 27 more mining licences approved by the Zambia Environmental Management Agency (ZEMA), can rightly move up in ranking.

Statistics from the Ministry of Mines show that, only 55 per cent of the country has been mapped while the remaining 45 per cent which is endowed with more copper deposits and other minerals, is yet to be explored.

Being Africa's biggest copper producer, the country is set to be overwhelmed by more investments in the mining sector and might surpass the number two producer USA which currently boasts of not less than 1,300,000 tonnes, Peru with 1,260,000 tonnes while Chile, the top producer, is riding on 5,320,000 tonnes per annum.

But while this is seen a great achievement for the country with a population of about 13 million people, the challenge is where the excess copper will be taken for processing as Zambia has not done much to invest in adequate processing facilities.

Already, the First Quantum Minerals Limited (FQM) is stuck with more than 60,000 tonnes of copper concentrates which have been marooned for a long time due to the lack of adequate smelters to process the metal.

It may not be FQM alone as other mines could be facing the same challenges of processing copper concentrates..

The current facilities at Konkola Copper Mines (KCM)'s Nchanga, Nkana and Mopani's Mufulira smelters, still have no capacity to process close to 800,000 tonnes of copper the country has so far recorded.

To make matters worse, even the completion of other smelters such as the one at Lumwana and Chambishi for instance, which are expected to come on stream sometime next year, will still be not adequate enough to handle the excess copper concentrates that will come from emerging mines such as FQM's Sentinel mine, Luanshya Copper Mine's Muliashi project and more from the Konkola Deep mining project (KDMP) among others.

FQM director of operations Matt Pascall's call to the Government for a duty waiver on the concentrates which currently stands at 10 per cent, should be considered to help decongest the few processing facilities in the country.

This will enable mining companies to ship their concentrates to other countries in the region and according to FQM, the Government could realise in excess of US$ 40 million on tax in profit.

But that aside, the Chamber of Mines of Zambia (CMZ) has not seen that as very significant solution and has instead called for more investments in copper processing facilities if Zambia to handle the anticipated copper production boom come the year 2015.

The Zambian mining industry needs substantial investments in processing facilities to match the volume of investments in copper mining projects and there is also the need to lure potential investors from big economies such as the US, Chile or China to set up processing facilities that will absorb high volumes of copper concentrates this country will be producing in the next couple of years.

Such facilities if set up will in turn, facilitate value addition to the product, create more employment opportunities and contribute significantly to the country's Gross Domestic Product (GDP).

The continued absence of these facilities will pose a big challenge for the local copper producers who will continue to pile up the mineral which, in the event of copper prices dipping low on the London Metal Exchange will culminate into huge losses for the industry.

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