By Boniface Mwila
Principal mining engineering consultant SRK Consulting (SA)
Zambia faces an exciting year as rising mining output boosts gross domestic product; but exploration efforts must continue to grow if this resurgence of the mining sector is to be sustained.
The country managed a strong growth rate of 6,5 % in 2013, supported by a 20% rise in copper output last year, and this trend is set to continue as some key mines expand and new projects come to fruition.
All eyes have been on First Quantum Minerals’ Kansanshi mine, which is helping push Zambia’s copper production to historic levels over the next three to four years; the operation’s new smelter will take the mine’s annual output to about 400,000 t by 2015. Copper production in Zambia peaked at 700,000 t/a in the 1970s before dropping back to 255,000 t/a in 1998.
At the heart of mining investment – whether in new exploration or expansions – is a healthy combination of an attractive and stable regulatory environment, responsible corporations, and the right technical skills. Zambia generally fares well in each on each count: it is blessed with highly skilled professionals and experienced workers, most mining companies are responsible corporate citizens, and government recently renewed its commitment to apply modern principles of transparency and accountability in the management of mineral resources which translate into tangible benefits for the people of Zambia. Because of this and many other initiatives, Zambia now ranks No. 83 out of 189 countries on the World Bank’s Ease of Doing Business index, benchmarked to June 2013.
This paves the way for the high-risk end of the business – early-stage exploration – to flourish, as investors can feel confident about building and operating a mine if and when they uncover an economic deposit.
There is already good reason to be positive about exploration ventures in Zambia, as many are underway in various parts of the country and in a range of minerals. For example Rio Tinto, at the 3rd Zambia International Mining and Energy Conference held in Lusaka last year, confirmed that it was running with exploration portfolios, centered around the Luswishi Dome on the Copperbelt and Northwestern provinces. The Australian Securities Exchange listed mining company, Blackthorn Resources, also revealed that it was carrying out copper ore exploration activities in Mumbwa, west of Lusaka and would be completing a pre-feasibility study in 2013. Many other companies are showing increased interest in such activities in acknowledgement of the efforts the government is making in stabilising the mining industry and the economy of Zambia.
More exploration is vital because, despite Zambia’s efforts to diversify away from copper, it is still vulnerable to price fluctuations; mining a range of different minerals will help mitigate these risks.
Perhaps more important than mineral diversity, however, is the need for mining activity to stimulate local secondary industry. Of course, the challenge of infrastructure is well recognised, and affects especially rail facilities, road networks and the electricity grid.
Speaking at the Mining Indaba in Cape Town in February, Zambian minister of Mines, Energy and Water Development Christopher Yaluma acknowledged that the mining industry could make a more significant contribution to economic development if the necessary infrastructure was in place. Let me leave that topic for a future column.