Zambia’s economy set to grow by 8.1% in the next few years


he completion of major copper mining projects in Zambia next year is expected to contribute to economic growth of 8.1% from 2014 to 2016, advisory firm KPMG states.

“Copper production in the country peaked in the 1970s at 700 000 t and gradually declined to 255 000 t by 1998, as a result of depressed prices and under- investment in the then State-owned industry. However, as copper production soars on the back of the completion of major projects and also because of the development of the new Trident mine, operated by Canada-based mining company First Quantum Minerals (FQM), Zambia is set to be at the peak of copper production once again,” says KPMG senior partner in Zambia Jason Kazilimani, Jr.

FQM reports that one of its major projects, the Kansanshi mine, has under- gone several significant expansions – the most recent being a smelter that is currently being built. It is estimated that the smelter will produce 300 000 t/y of treated copper concentrate. Before this new development, the mine’s initial production capacity was 110 000 t/y of copper.

By 2015, the yearly production should reach about 400 000 t of copper, which is a major achievement that will ensure the mine reaches it one-million tons of total copper production by 2017.

Another significant project is the Lumwana copper mine, in Zambia’s Mwinilunga district, in the North-Western province, which is owned by Canada-based mining company Barrick Gold Corporation. In the first quarter of this year, the mine produced 122-million pounds of copper at a cash cost of $2.68/lb.

Lumwana ore, which predominantly comprises sulfide, is treated through a conventional sulfide flotation plant, pro- ducing copper concentrate for smelting.

“Under the direction of the new leadership appointed in 2012, a turnaround team of functional experts and site management has been working to improve operations and reduce costs. Lumwana delivered a substantially improved performance in the second quarter of 2013, reflecting the changes to the mine plan and business improvement initiatives. The improved costs primarily reflected a major reduction in contract mining costs,” states Barrick Gold.

Barrick Gold further states that several other initiatives continue to be implemented on site to enhance the productivity of the core mining fleet and build upon the cost reductions achieved so far. The improvements at Lumwana have enabled a significant improvement in Barrick’s 2013 copper cost guidance.

According to the World Bank, Zambia has the largest known reserves of copper in Africa, 6% of the global resource. As a result, countries such as China are depending on the production of copper in Zambia to cater to their electricity demands. “China’s electricity generation and distribution industry accounts for 45% of copper consumption. Hong Kong currently consumes half of China’s electricity and a fifth of the US’s value. As a result, China’s demand for electricity and copper are expected to continue to grow in the medium to long term,” highlights Kazilimani.

However, he notes that although there is such a great demand for copper internationally, the greatest challenge faced by the Zambian mining industry is aged and inadequate infrastructure in the road, rail and power sectors. “The problem is so serious that, according to an Africa Infrastructure Country Diagnostic 2011 report on Zambia, investment of at least $16-billion over the next decade is required just to catch up with the rest of the developing world,” he adds.

Although aged road and rail infrastructure is a challenge for industry, Kazilimani points out that it also presents an opportunity to drive growth in the Zambian mining industry, where investors and contractors can be involved in government’s investment drive to try to resolve this challenge.

“Further, the country’s economic growth could be driven by the development of greenfield sites. There are significant copper, gemstone, gold, zinc, hydrocarbon and other deposits that remain unexploited. With an able workforce, relatively low mineral royalties and other investment incentives, the potential for growth is immense,” he explains.

Kazilimani points out the current exploration activities in the North-Western province of Zambia are likely to add to potential economic growth sites, adding that Zambia is also rich in other minerals and precious stones. “For example, 20% of the world’s output of high-grade emeralds are produced in Zambia, at the Kagem mine, which is operated by Gemfields.”

Other Investment Opportunities in Zambia

A variety of Zambia’s industrial minerals and potential energy resources, including uranium, coal and hydrocarbons, present excellent investment opportunities in the extraction and processing of these mine- rals in the country, states the Zambia Development Agency (ZDA).

With gold, the majority of the deposits are iode-type bodies associated with the Mwembeshi shear zone, which is a ductile shear zone of about 550-million years old, and related syntectonic intrusions. Significant gold mineralisation also occurs, variously with copper and uranium, in major thrust zones near the base of the Katanga succession in the Democratic Republic of Congo. More than 300 000 oz of gold occurrences have been recorded, but most are only prospects.

The ZDA notes that carbonate-hosted zinc and lead ore has been mined from the Kabwe mine deposit, in central Zambia, where 11-million tons of ore averaged close to 25% zinc and 15% lead. The mine is owned by mineral processing company Berkeley Mineral Resources.

Further, substantial resources of iron have also been identi- fied, occurring primarily as sedimentary ironstones in the lower-Katanga mine, in central Zambia. Total resources of more than 900-million tons, with an iron content of more than 50%, have been provisionally estimated, with some individual deposits up to 200-million tons in size.

“Orthomagmatic nickel occurrences are known in the basement sequences south and east of Lusaka. Sediment- hosted nickel deposits, in Mwashia, and mine series rocks of north-western Zambia are associated with gabbroic intrusions and often show evidence of hydrothermal enrichment. Also, minor platinum-group elements are produced as a by-product of copper refining on the major Copperbelt mines and from the Munali deposit, south of Lusaka,” states the ZDA.

Gemstones in Zambia

Alluvial diamonds have been found throughout much of north-eastern and western Zambia. Kimberlite and lamproite intrusions occur within and near to the western flank of the Luangwa river and in southern Zambia, but no diamond-bearing diameters have yet been discovered, highlights the ZDA.

Also, Zambia produces about 20% of the world’s emeralds and they are sought after, owing to their deep green colour. The gemstones are recovered exclusively from the Ndola rural area of the southern Copperbelt.

Aquamarine and tourmaline are mined in the Lundazi and Nyimba areas of eastern Zambia, while amethyst is being mined in the Mwakambiko Hills near Lake Kariba, where it occurs in veins and stock works generated during late-Karoo or post-Karoo tectonism.

Zambia’s Mining Environment

Kazilimani notes that the Zambia Chamber of Mines has been quite active and outspoken, particularly on the tax regime, as it affects mining companies and this has allowed foreign investors into the country, which will boost the economic growth in Zambia.

“Such potential in the Zambian mining sector stands as an example to all African countries that when you have political stability, sound economic policies and commit to infrastructure development, global investors will take notice and development will follow,” he adds.

Kazilimani concludes by noting that countries, such as South Africa, can take part in the mining boom by partnering with the right organisations within the contracting space, to develop known mineral deposits.