HomeBase MetalsHigher power tariffs may close some Zambian mines

Higher power tariffs may close some Zambian mines

Power “’ higher tariffs
may close older
Zambian mines
Lusaka, Zambia — MININGREVIEW.COM — 13 July 2010 – Foreign mining companies operating older mines in Zambia “’ Africa’s largest copper producer “’ may be forced to shut some of their operations if state power utility Zesco goes ahead with the introduction of higher tariffs.
The government of Zambia plans to raise prices in a bid to shift to more viable electricity tariffs gradually by 2013, to raise money for investment in new power generation facilities.

Copperbelt Energy Corporation’s managing director for corporate development Michael Tarney told Reuters Zesco should consider the costs of individual mines when arriving at the new tariffs.

“The modern mines can absorb the higher tariffs because they are using modern technology and incurring lower costs, but the old mines may be forced to shut down if electricity costs are very high,” Tarney said. “There is a need to critically examine the costs of the old mines because they are using expensive technology.”

Tarney said his company had an agreement with Zesco that provided for yearly electricity tariff increases to cover inflation. He added that the last electricity tariff increase for CEC outside the arrangement to cover inflation was in 2008, when the tariffs were hiked by 33%.

In May this year, Zesco asked Zambia’s energy regulator for a 36% increase in electricity tariffs for users other than the mines.

The power firm was granted a 26% hike for the period April 2010 to March 2011, but asked the regulator to allow it to raise tariffs by a total 36% from July, citing inflationary pressures, rising import costs and steep hikes in the price of equipment.