Zambia can once again become the continent’s largest copper producer if it regains competitiveness, according to the country’s largest producer, First Quantum Minerals.
The key to attracting the foreign direct investment to restore Zambia’s number one slot is to ensure competitiveness and stability, says First Quantum Minerals (FQM), which accounts for around half of the country’s copper production.
Essential to this is a competitive electricity tariff structure that reflects the true cost of power production, including the fully depreciated hydro-power facilities that are the backbone of the country’s generation, says FQM head of government affairs John Gladston.
“We have every intention of making Zambia reclaim its rightful position as Africa’s number one copper producer. And I think that is entirely achievable,” he stated.
In order to provide investor confidence and attract further foreign direct investment in an increasingly competitive global mining sector, Zambia needs a similarly competitive and stable tax and mineral royalty regime, along with stability in its major costs such as electricity and fuel.
“Fundamental to long-term private sector investment is knowing what the costs will be for the life of its investment in Zambia, and that a natural equilibrium must be sought to ensure equitable benefits between investors, government and communities,” he added.
First Quantum believes the current electricity tariffs do not reflect the underlying production cost, and that reforms are needed to improve the operational efficiency of national electricity utility ZESCO.
The country produced 755,000 tons in 2017, ranking it seventh globally and second in Africa, behind the Democratic Republic of Congo (DRC), which produced 850,000 metric tons.
The DRC ranked sixth in the world with global leader Chile producing 5.33 million tons.
First Quantum has invested in excess of US$ 6.4 billion in its Sentinel and Kansanshi Mines and the Kansanshi Smelter, and has paid more than US$3.5 billion in taxes in the last 11 years, transforming the economy of North-Western Province and creating direct employment for more than 8,500 people.
One element of that was the long-awaited Kalumbila Multi-Facility Economic Zone (MFEZ), which is awaiting government approval, and for which more than US$100 million has been pledged from investors once it is established.
“FQM is also playing a major role in complementing government’s diversification agenda. And we have attracted a Chilean-Chinese company to build a mill ball factory at the MFEZ. It is 85% complete and it will be producing mill balls not only for Kalumbila Minerals, but also for the region,” he says.
Permanent Secretary at the Ministry of Energy Brigadier-General Emelda Chola says that since privatisation in 2000, approximately US$13.13 billion has been invested in the mining sector.
But she added: “The mining industry has not stimulated the growth of other sectors as expected, mainly because policy on mining has been tailored to position mining as a mere source of government revenue and not broad-based development.
“The government is working to change this situation. The focus is on ensuring that mining contributes to the development of the economy and job creation. The performance of the sector will now be assessed on the basis on growth of linkages with other sectors and impact on the lives of ordinary Zambians,” says Chola.