Zambia’s mining sector remains conducive for FDI

By Tichaona Kurewa

Harare – The latest assessment of Zambia’s mining sector governance and investment attractiveness shows the Southern African country remains an appealing investment destination owing to its favourable geology, decades of mining history, political stability and low risk of expropriation, high levels of security; and a relatively favourable economic environment, the Mining Investment and Governance Review (MInGov) has shown.

MInGov’s development is led by the World Bank with the assistance of Adam Smith International (ASI) in collaboration with the African Centre for Economic Transformation (ACET), the Natural Resource Governance Institute (NRGI) and the Fraunhofer Institute.

The SADC member state has a long history of mining, which dates back to the colonial era and a large reserves of copper, emeralds and other mineral deposits. It also has a very good potential for further discoveries. Mining sector accounts for 12 percent of Zambia’s gross domestic product (GDP) and 70 percent of the total export value.

The sector is also a significant source of government revenue and formal employment, both directly and indirectly.

Continuing to attract investment in the sector is crucial to the country’s growth since it constitutes 62 percent of foreign direct investment. MInGov findings revealed that Zambia is a conflict-free nation making it more attractive to foreign direct investment.

“The country is an attractive place for investment due to favourable geology, its long history of mining, its political stability, and a relatively favourable economic environment.

Zambia is also safe and secure since the country’s independence in 1964 there has never been a war,” the report shows.

However, the same review also pointed out bottlenecks restraining the mining sector’s growth potential in that country.

“Priority areas for improvement include stability of its mining and fiscal policy; the development of domestic procurement policies; improved budget transparency; and frameworks for improved infrastructure development, particularly energy infrastructure,” it says.

“Integrating the mineral sector into national development planning is a crucial driver for sustainable development in Zambia.”

World Bank Country Manager for Zambia, Ina Ruthenberg, says more can still be done for the country to fully benefit from its mineral resources.

“Zambia is rich in minerals but we haven’t fully managed to convert that wealth for the benefit of the people,” says Ruthenberg.

“We need to know where to improve and what changes to make so we can harness this wealth to benefit not only current, but also future generations of Zambians.”

According to the review, the positive aspects of the Zambian mining sector are overshadowed by a lack of transparency and accountability regarding revenue management, a lack of consistency surrounding fiscal policy, and lack of support for diversifying the economy and leveraging of infrastructure for the general population.

MInGov gives government and regional public organisations access to policy and institutional analyses that affect the sustainable development of the mining sector, including its investment climate, effectiveness of public institutions in developing and monitoring the sector, as well as the costs and benefits to stakeholders.

Investors, mining companies and other companies in the sector benefit from access to country-specific, relevant governance data, policies and practices of governments that affect investment risk and decision-making in the sector.

Mining makes up a substantial part of the economies of many SADC countries and has the potential to deliver significant development benefits when managed in a holistic, sustainable manner. Responsible mining can lift people out of poverty by offering economic opportunity, jobs and training.

It generates tax revenues that governments can spend on services like health education, infrastructure and other social programmes.

The infrastructure can be shared with local communities to supply electricity and water as well as providing a robust road network.

Other SADC countries where mining is predominant include Botswana, Zimbabwe, Namibia and South Africa.

Source: The Southern Times

KCM supports growth for manufacturers of leather products

KONKOLA Copper Mines (KCM) has announced the signing of a Memorandum of Understanding (MoU) with the Copperbelt Leather Industry Cluster to establish the Leather Sector Cottage Industry Clustering and Incubation Project.

The company says the objective of the assistance to the leather association is to facilitate the creation and development of viable cottage industries in the Leather Sector. About 200 Small and Medium Scale Enterprises (SMEs) will also receive training for making leather products like safety shoes and gloves for the mining industry when they build necessary capacity in the future.

The project will target shoe cobblers, shoe makers and the youth who will primarily be identified from the communities where KCM operates.

Commenting on the project, KCM Manager Community Relations Brian Siatubi said: “the signing of the MoU is a significant step in KCM’s plans to help improve the lives of Zambians through economic diversification. The project will contribute to employment generation which is critical to support sustainable livelihoods in the communities.”

Mr Siatubi said KCM would provide the initial capital requirement of one hundred and twenty one thousand kwacha (K121, 000.00) to procure leather-making equipment and machinery required by the Copperbelt Leather Industry Cluster project.

“Our long-term goal is to support the growth of the leather industry so that SMEs can be supplying leather products like safety boots and gloves to the mining sector in the next few years. The support and growth of local industry fits into KCM and Vedanta Resources’ long-term vision to continue mining in Zambia for the next 50 years,” Mr Siatubi said.

Copperbelt Leather Industry Cluster Coordinator Preston Viswamo hailed KCM’s assistance as ‘a major milestone’ in pursuit of the growth of his association.

Commenting on the signing of the MoU, Mr Viswamo said: “it is a milestone because this partnership with KCM will strengthen us in terms of delivering services to the SMEs in the leather sector. The relationship with KCM is going to advance our operations and enable us to grow, especially our members in Chingola. It will allow us to create market linkages for the Chingola cluster with the main one in Kitwe.”

Source: Mwebantu

FQM’s Sentinel leading future copper mining ventures in Zambia

First Quantum Minerals’ new $2.1-billion Sentinel mine in Zambia is the one of the most-ambitious ventures for the country’s mining industry.

This is according to the Zambia Chamber of Mines which states that the Sentinel mine is the single-largest upfront infrastructure investment in Zambia since the Kariba dam.

And by virtue of its technological sophistication; it is a blueprint for the future of mining in Zambia because it shows that it can be economically viable to mine a low-grade copper deposit.

Sentinel mine is located in the town it gave birth to – Kalumbila – and for this reason is often referred to as Kalumbila mine.

The Sentinel mine started operating in September 2015, and is currently producing around 150 000 tpa of copper. It expects to reach full production of up to 300 000 t in 2017; of both concentrate and plated copper.

Owned by First Quantum Minerals (FQM), the mine took five years to build where thousands of contractors were employed and more than 265 000 t of equipment was transported to the site, in 14 500 massive truckloads.

There was no existing power grid, so more than 600 km of power lines had to be constructed, running halfway across the country down to the west of Lusaka.

However, instead of burning the timber, FQM built a sawmill which employs 120 people and uses the wood to make fence poles, furniture and other wood products.

The Sentinel project consumed prodigious quantities of cement, fuel and food; launched many local businesses large and small; created employment and kick-started the creation of an entire local economy where none previously existed.

“Sentinel mine puts Zambia at the forefront of global mining technology,” says John Dean, commercial manager.

“It sets new standards in efficiency, productivity and training, and sets a precedent for future copper-mining ventures in Zambia,” says Dean.

Sentinel mine’s technology

Sentinel mine is a low-grade, open-pit mine – the ore contains only 0.51% of copper.

Yet the mine is anticipated to produce a long-term return on investment because it has been designed from scratch, carries no legacy issues, and uses the most sophisticated mining technology in the world.

Everything is advanced: the big drill rigs allow explosives to be placed at greater depths, the trucks are gigantic, and carry heavier loads. The steel-ball mills are the world’s largest and grind larger quantities of ore.

In addition, the conveyor belts are long and carry more material further, the world’s largest semi-mobile rope shovels scoop out 120 t of ore at a time from the pit and can fill a 250 t truck in under a minute.

“It’s all about speed, efficiency and economies of scale,” says Dean. “The mine would not be viable without this level of technology.”

The technology is expensive – and dangerous – and proper training is required.

For example, the drivers of the heavy haul trucks learn their craft in sophisticated equipment in state-of-the-art simulators which use virtual reality to replicate real-world conditions.

In one simulator session, a driver is learning to drive in heavy rain and muddy terrain.

As the rain beats down on the windscreen and the truck struggles up a hill, the system faithfully records the driver’s movements, offers advice via screen prompts and records his score.

In a room alongside, the rest of the team watch the session in real time on a bank of computer screens.

All drivers have to do simulator training every two years as a refresher course, if they’ve been away from work for more than a month, or if their daily driving reports show too many errors.

“Sentinel is not just about sophisticated technology,” says Dean. “It’s also about operations, maintenance, working practices, employee productivity – and having access to affordable and reliable energy,” he adds.

Energy is an emotive issue at Sentinel. Despite having built nearly 600 km of powerlines, Sentinel has yet to be fully connected to the national grid by electricity supplier Zesco.

The mine is currently running on reduced supply, and needs about 30% more energy to operate at full capacity – especially as most of its sophisticated machinery and equipment uses electric power rather than diesel fuel.

Nevertheless, even at current production levels, Sentinel’s contribution to national output confirms North-Western province’s reputation as the country’s largest copper-producing region.

Its three mines – FQM Sentinel, FQM Kansanshi and Barrick Lumwana – together produce nearly 500 000 tpa of copper, which is about 70% of Zambia’s annual production of 711 000 t.

“Fifteen years ago, there was no mining industry to speak of in North-Western province,” says Dean.

“Today, several billion dollars of investment later, that has changed completely. The province has become the new Copperbelt. Sentinel is the most recent example of that shift,” he concludes.

Source: Mining Review Africa