Zambia’s Mining Sector marks Tremendous Growth.

Mining Sector Back On Track

The Times of Zambia (Ndola)
NEWS
29 June 2007
Posted to the web 29 June 2007

THE Zambia’s mining sector is back on track.

The performance of the sector has improved tremendously in the past few years. Copper production levels have increased from a low of 256,884 tonnes in 2000 to 515,010 tonnes in 2006 while the average copper price rose from US$0.82 per pound in 2000 to US$3.15 per pound in 2006.

Employment levels in the mining sector which had declined to 35,966 in 2000 increased to 50,000 in 2006.

The GDP growth of the mining sector increased to 11.8 per cent from 6.2 per cent in 2000.

Copper output is projected to reach 600,000 tonnes by the end of this year (2007) and 1,000,000 tonnes per year in the next one or two years.

“These statistics show that the mining sector has regained its strength and it is the wish of everyone to see this translated into improved well-being of Zambians.” says Mines minister, Kalombo Mwansa.

Dr Mwansa says Zambia is endowed with various mineral resources which include copper, cobalt, zinc, lead, nickel, platinum group elements, manganese, tin, tantalum and iron.

Among the industrial minerals, Zambia has limestone, phosphate, feldspars, silica and dimension stones such as marble, granite and sodalite.

Energy minerals found in the country include uranium, oil and gas.

This is in addition to the abundance of precious stones and mineral deposits among them amethyst, aquamarine, citrine, tourmaline, gold, silver, diamonds and garnet.

The minister notes that Zambia has vast potential for further mineral exploration, as about 45 per cent of Zambia is yet to be geologically surveyed and covered by geological maps.

The maps enable private companies to engage in comprehensive and detailed prospecting work with a view to developing new mines.

Opportunities also abound for oil and gas exploration and development in Zambia, given that recently, the method of Microbial Prospecting for Oil and Gas (MPOG) has produced very promising results in North-Western Province.

Further exploration by the Geological Survey Department using the MPOG method is expected to take place this year.

The exploration activities will cover Western Province, North Luangwa or Chama areas in Eastern Province where Placid Oil did extensive preliminary explorations in the 1980s.

“Areas which will show positive results will be demarcated into additional blocks and announced to invite tenders for companies to undertake investigations leading to feasibility studies and mine development,” says Dr Mwansa.

With regard to investment and business opportunities in copper, African Eagle Resources, a company that has been carrying out copper explorations in Mkushi, has discovered more high grade copper in the area, some four kilometres south of the main copper zone discovered earlier.

According to the 1990 study of the Zambia Consolidated Copper Mines (ZCCM), the area in Mkushi at Munda, could contain up to eight million tonnes of copper ore at an average grade of 1.2 per cent.

Some 96,000 tonnes of copper could be extracted from the area.

The African Eagle Resources believes their prospecting work in the area could raise this figure to 500,000 tonnes.

On the Copperbelt, the Government recently granted Teal Exploration and Mining a large scale mining licence to start mining operations at Mwambashi near Chingola.

The company is also undertaking explorations at Konkola North.

Both Mwambashi and Konkola North would soon develop into new mines.

In Lusaka Province, says Dr Mwansa, Zambezi Resources is preparing to open a new mine in Chongwe.

A major highlight is the discovery of copper and gold deposits at Cheowa in the district whose extraction will soon be underway.

The possibility of developing new uranium and coal mines in Zambia is another exciting investment opportunity, says Dr Mwansa.

Omega Corporation Minerals has discovered significant deposits of uranium in Southern Province near Lake Kariba.

So far the resource estimate is 13.7 million pounds of uranium and the company is getting ready to apply for a large scale mining license.

Given the global high demand for energy, this development too is an important investment opportunity for Zambia and the region at large.

Dr Mwansa says Coal mining in Zambia is at present far from satisfying the local and export demand.

The local demand for coal per month stands at a little over 35,000 tonnes while the export demand within the SADC region is close to 5,000 tonnes.

This brings to 40,000 tonnes the total number of tonnes of coal required per month.

Maamba Collieries, Zambia’s largest coal mine in Southern Province, is currently producing about 6,000 tonnes of coal per month.

Even when added with productions from other producers, the total coal output remains far below the 40,000 tonnes per month needed to satisfy both local and regional demand.

The Konkola Deep Mining project under Konkola Copper Mines (KCM) has the potential for equity participation and supply of engineering services by other investors.

Expected to be fully operational by 2010, the project, which will increase Konkola mine lifespan by at least 30 years, will be one of the largest investments in Zambia.

Lumwana copper project in Solwezi and Mulyashi in Luanshya are two other projects which, when fully developed, would have far-reaching impact not only on the Zambian economy but the region and the continent as a whole.

The Mines minister says rich copper deposits have also been discovered in Luapula Province and a mine and large processing plant are earmarked to be opened in the province in due course.

“We are determined as Government to ensure that in the next three to four years, we open one large mining activity in each of the nine provinces of the country in order to create jobs and wealth for the people,”says Dr Mwansa.

The minister says Zambia is on course to recapture its former status as the leading copper producer in the SADC region and the world-over.

He says an international study undertaken recently ranked Zambia as the fourth most preferred investment destination out of 25 countries sampled worldwide.

Dr Mwansa says Zambia offers some of the best incentives in the mining industry such as exemption from customs and duty on all mining equipment and machinery imported for mining purposes, 10 year carry-forward losses for tax purposes and corporate tax at 30 per cent.

Further incentives are provided in the mining development agreements.

These include free usage of foreign exchange and stability of the legal and fiscal regime.

“It is a fact that Zambia is a peaceful country with peaceful and loving people always ready to welcome and work with investors from any part of the world,”says Dr Mwansa.

Dr Mwansa notes, however, that while annual copper production has increased manifold over the last few years, very little is being done locally to add value to the commodity for enhanced revenue accrual to the nation.

The Luanshya-based Zambia Metal Fabricators (ZAMEFA), the only company known to make copper rods, wires and cables, uses less than 10 per cent of the copper produced in Zambia with the remaining (90 per cent)being exported to overseas markets in raw form.

Export of raw materials such as copper means export of jobs meant for thousands of Zambians.

At regional level, Dr Mwansa calls on SADC member States to work together in developing the mining sector.

He says SADC member states should harmonize their policies in order to create an all-round friendly investment climate in the region.

“SADC countries should come up with common approaches to issues like taxation and the environment which are key to sustainable development of the mining sector.” he says.

The minister says efforts should also be targeted at reducing the perceived political risk to investors and enhancing cooperation among SADC member States in the social, economic and political spheres.

Dr Mwansa also stresses the need for the creation of an investment climate conducive to exploration and mining activities in the SADC region.

He says appropriately developed regulations and taxation policies were cardinal in reducing risks to the investor and enhancing the flow of investment funds to the region.

The minister said the SADC mining sector was poised for massive growth in the wake of rising copper prices and the cessation of civil strife previously experienced in some countries in the region.

Dr Mwansa says collectively, the SADC region holds about 50 per cent of Africa’s total mineral wealth which is critical in propelling the continental economy forward. -ZANIS