Strong copper prices and support extended to the industry by government are expected to drive copper production growth, despite ongoing power shortages, this year.
Statistics from the central bank indicate that copper production reached 362 000 t by June 30, down slightly from the 367 000 t produced in the first half of 2016.
Despite the drop, international research institution BMI Research remains optimistic that the country’s copper production will surge.
“We are positive on Zambian copper and maintain our forecast of 7% growth this year as Zambian President Edgar Lungu remains supportive of the sector, and rising copper prices incentivise domestic miners to ramp up production during the second half of the year,” BMI said.
Ongoing power shortages resulting from the country’s dependence on hydropower and rising water tariffs are the key risks facing mining sector moving forward.
In August, two of the country’s biggest copper producers, Glencore and First Quantum Minerals, were forced to reduce power at key operations, owing to tariff disputes with electricity provider Copperbelt Energy Corporation.
However, improving rainfall and rising dam levels in the country will ease some of power shortages experienced in recent quarters.
Another key driver of strong copper production this year will be the positive trajectory of prices in 2017 relative to last year.
Since touching lows of $4 500/t in June last year, copper prices have risen over 57% to $6 810/t in August owing to strong demand from China.
“While it is possible that prices may unwind from current levels towards the end of the year, we think the gradual uptrend over the last 12 months will bode well for mining activity in Zambia.
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