Export of finished products can offer significant cover for the country’s economy against falling copper prices, Stanbic Bank has said.
Leina Gabaraane, Stanbic Bank Chief Executive Officer said there is need to invest in value addition in the mining sector to minimise the impact of changes in the prices of minerals on the international market Speaking on the side lines of this year’s Investing in Africa Mining Indaba in Cape Town South Africa, Gabaraane said the local economy is always heavily impacted by a fall in the price of minerals – especially copper – due to a lack of an economic buffer to shield it from such downturns.
“Zambia’s heavy dependence on the export of raw mineral resources means that our economy is highly sensitive to any changes in mineral prices on the international market,” said Gabaraane.
He said shockwaves from a fall in the cost of copper on the London Metal Exchange are keenly felt across the country’s economy, as it dents export earnings and foreign exchange inflow, which in turn affects the US dollar to local current ratio.
“Therefore, a thriving minerals processing industry will go a long way in promoting economic stability, as the market for finished products is less susceptible to huge fluctuations in commodity price.
“An added advantage of mineral beneficiation aside from increased forex inflow is the creation of more employment opportunities in the processing industry which may have a positive impact on poverty reduction,” Gabaraane said.
Stanbic is exploring ways in which it could help stimulate growth in the processing industry through investment so that the country can export more processed products than raw materials.
Currently statistics indicate that insufficient investment in mineral beneficiation has been a persistent problem for many mineral-rich countries in Africa.
On the other hand several countries spend billions each year to import products processed from the raw materials produced within their borders thus vastly limiting their GDP growth as well as currency stability.
Stanbic Bank Zambia is one of the biggest players in Zambia’s mining industry, with over $3 billion invested in the sector so far.
“Previously, limited access to finance had stifled growth in the extractive industry as well as its subsectors. We recognise the significance of mining to the local economy hence we will continue to look for ways to increase our contribution to the sector’s growth and maximise the country’s benefit from it,” said Gabaraane.
The mining industry contributes about 12 percent to GDP and accounts for 75 percent of the country’s exports.