Copper, a major export of Zambia, is under scrutiny as challenges arise and the industry constantly under probity. The Zambian copper mining industry as we know it today had its genesis in the 1920s.
In 2016, in the 116th volume of the Journal of The Southern African Institute of Mining and Metallurgy, researchers J. Sikamo, A. Mwanza, and C. Mweemba gave insightful accounts of the history of the industry, and the future of the industry. This article is an extract thereof.
Consistent private sector-driven investment in the industry over a period of over 50 years in exploration, mine development and operation, development of minerals processing facilities, building of infrastructure for pyrometallurgical and hydrometallurgical processing, with attendant support facilities, including building of whole new towns, resulted in copper production rising to a peak of 769 000 t in 1969, providing over 62 000 direct jobs.
The industry was nationalized in 1973 and remained in government hands for just over 24 years.
During this period, the industry experienced a serious decline in production levels, reaching the lowest level in the year 2000 when production was 250 000 t.
An average of just under 2000 jobs were lost every year in the 24-year period, reaching just over 22 000 direct jobs in 2000.
Following the return of Zambian politics to pluralism and liberalized economic policies, the government decided to privatize the mining industry.
The process started in 1996 and by the year 2000 all the mining assets had been privatized. The new investors embarked on serious investment to upgrade the assets and to develop greenfield mining projects.
Fourteen years later and after more than US$12 billion investment, production levels increased year-on-year to a peak of 763 000 t in 2013 with direct jobs reaching 90 000.
This paper discusses the impact of the mining industry in Zambia on the economy in areas such as employment, support for other industries, direct contribution to the national gross domestic product (GDP), foreign exchange earnings, and social amenities.
The paper also focuses on the performance of the mines during these periods vis-à-vis mineral availability, mineral grades and complexity, new technologies, and human capital. This is looked at particularly in the light of current challenges the industry is facing.
Suggestions are proposed on how the industry can be nurtured to continue being a major driver for the Zambian economy and a major player in the international copper mining business.
The geology of Zambia shows great potential for further investment in mining.
The past few years have seen significant instability in the fiscal regime and this has undermined new investment into the sector.
The challenges of the 2013 to 2014 fiscal regime resulted in copper production dropping from 763 000 t in 2013 to 708 000 t in 2014.
The first half of 2015 saw a further decline in production, particularly following the uncertainty brought about by the Mineral Royalty Taxation regime of 2015.
It is gratifying to see that the government has shown serious desire to engage in dialogue to arrive at optimum levels of taxation which will ensure that government continues to receive taxes from the mines, and also that the mines continue to thrive and invest, on a sustainable basis.
Clearly this is the way to go. This state of affairs has been confirmed by government, which has said that it is committed to putting in place a taxation regime that is stable, predictable, consistent, and transparent.
Investors have welcomed this and obviously this should translate into a very bright future for the Zambian mining industry.
The mines performed badly during the period of nationalization, since they lost focus from their core business.
Continuous re-investment in machinery and new technology is very important for increasing productivity.
Investing in human capital is another area that is very important and new mine owners will do well not to neglect this aspect.
It is gratifying to see that the mining companies operating in Zambia are taking all these important aspects of mine development into consideration, and the results are visible.
For its part, government should continue providing policies that will attract capital into the mining industry.
These policies should be dynamic in nature so that the country remains competitive with other major players on the global market.
The key here is continuous engagement with stake holders so that the government is abreast of the changing challenges and other requirements in the industry.
To counter the legacy of prolonged undercapitalization of the old mines, particularly regarding modern machinery and technology, government should encourage greenfield projects that are able to build low-cost mining operations that can withstand the constant shock of copper price fluctuations.
Source: SCIELO
