First Quantum Mining propels Zambia’s H1 (YoY) copper productivity 8% higher, full year forecast is 5.4% bullish.

Underground mine
Underground mine
Copper productivity at Kalumbila mine in northwestern province of Zambia
Africa’s second largest copper producer Zambia recorded an 8% increase in copper productivity in first half of 2016, Zambia Chamber of Mines said. Zambia’s tonnage increased to 368,366 metric tons from 340,510 metric tons a year earlier. Full year forecast is 750,000 metric tons, 5.5% higher than 2015’s production of 711,525 metric tons. Key contributors to first half productivity were First Quantum Mines namely Sentinel (Kalumbila), Kansanshi and Barrick Lumwana mines contributing 7/10th of overall tonnage.

Ministry of mines however forecast a doubling in productivity levels to 1.5million metric tons next year on account of improved energy prospects. Zambia’s copper productivity has been curtailed by power rationing as mines consume 57% of energy generated. The mines have had to ease pressure on the national grid. With the completion of phase 1 Maamba thermal coal plant narrowing the deficit by 150MW and other power projects in progress to include the Copperbelt Energy Corporation initiatives, more power is expected on the grid. Ministry of mines projection was however was deemed wildly optimistic by Commodities Research Unit – CRU whose production forecast for Zambia is just below 1 million metric tons for 2017.

Kalumbila is making northwestern province the new Copperbelt.
Sentinel is the largest single upfront infrastructure investment to the tune $2.1billion in the southern African nation after the 185million cubic little man made dam the Kariba. Kalumbila mine is producing 50% shy of full capacity due to energy constraints currently being suffered in Zambia. The mine is contributing 153,222 metric tons as opposed to 301,434 metric tons if it fired on all cylinders. With improved energy outlook prospects the mine hopes to contribute 300,000 tons annually. Kalumbila town is the immediate offspring of Sentinel mining investment.

Kakula high grade deposit is giving DRC an edge over Zambia
Ivanhoe mining could have just discovered the most notable high grade ore in Kakula located on the southern portion of its Kamoa project. “The discovery is ernomous,” Louis Watum Chief Executive of Ivanhoe mining said. Mining this ore is expected to commence in Q1: 2017. This discovery is expected to reinforce DRCs position as Africa’s number 1 producer of the red metal after Zambia.

Recent copper drivers on the London Metal Exchange
The recent 0.4% ease on stockpile levels on the London Metal Exchange – LME to 203,933 metric tons gave the metal a boost in price. These stock levels are the lowest since July 05. Copper edged 1.3% higher to $4,848 per metric ton on the LME as at 03:56 GMT on 12 Aug.

Other factors are metal markets pricing in German economic resilience. Germany is the second largest consumer of copper after China. Positive U.S growth data and a fading likelihood of Fed rate hike yet offset by a slowing China have been key drivers steering the metal price.

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