Several new copper projects in Zambia, Africa’s largest producer of the metal, helped boost production by 21% in the first 11 months of 2013, amid improving global metal prices.
Data from the central bank Zambia Thursday show that copper output increased to 915,773 metric tons between January to November 2013, compared with 755,359 tons produced in the same period a year earlier, as new mines continued to ramp up production. The output surge comes amid improving global copper prices, boosted by growing confidence about the health of global economy as well as recovering demand from China, the world’s top consumer of the metal.
“We are at a level where most copper projects that have been in the pipeline a few years back are coming on stream,” said Fredrick Bantubonse, an independent metal analyst in Zambia.
Companies such as Brazil’s Vale SA (VALE), Glencore Xstrata PLC (GLNCY, 0805.HK), First Quantum Minerals Ltd. (FM.T) and Vedanta Resources PLC (VED.LN) have pumped billions of dollars in Zambia’s copper mining sector in the past few years, helping to turn around the country’s once ailing industry.
Years of stable fiscal policies and relative peace have attracted world-class investors in Zambia’s mining sector since 2006 and the country’s copper output is poised to hit 1.5 million tons by 2015. Zambia’s January to November cobalt output also rose 17% from the year earlier to reach 5,857 tons.
After dropping for at least 8% on the London Metal Exchange last year, the copper prices have shown signs of recovery since December, buoyed by strong U.S. economic data and bullish growth forecast for China, according to analysts.
In the past couple of years, Zambia’s newly elected government, under president Michael Sata, has introduced a range of new fiscal and tax measures in the mining sector, rattling investors. However, most copper projects were already in pipeline and will keep coming on-stream, Mr. Bantubonse said.
One such policy is the requirement compelling mining companies to remit all of their earnings from copper and cobalt exports back to Zambia, in order to improve the accuracy of export monitoring. The Zambian government estimates that poor monitoring of actual copper output, combined with tax avoidance, may be costing the government up to $1.5 billion in lost revenue every year.