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COVID-19 slashes mining revenues by 30%

MINING companies’ revenues in Zambia have drastically fallen by around 30 per cent over the three-month period, February-April 2020, mainly triggered by the deep impact the COVID-19 pandemic has had on slashing copper earnings.

According to Zambia Chamber of Mines data, the COVID-19 virus has cut Zambian mining companies’ copper sales as a result of a disruption in the mining supply chain, which facilitates the export of the red metal to foreign markets.

Data reveals that the severe global restrictions on movement have wreaked havoc on the mining supply chain, and hindered the export and sale of copper, and that the copper price collapse early in the crisis, though has since strengthened, is still down on average by 12 per cent over the period when compared to 2019.

The fall in mining revenues is mirrored exactly in the fall in mineral royalty payments, as royalties are levied on each tonne of copper that is sold.

“For the industry, royalty payments are estimated to have come in at approximately US $60-65 million over the three months, rather than the US $90 million that could have been expected. This simple calculation illustrates how closely government revenues mirror the fortunes of the mining industry,” the statement read.

Commenting on the mining industry’s dwindling earnings, Chamber chief executive officer Sokwani Chilembo stated that mining companies had, however, performed well in maintaining production amid the COVID-19 crisis.

“The industry has done a magnificent job of maintaining production over this difficult period. But, for various reasons, revenues have fallen massively. Zambia’s miners have been battling even higher costs for years, and we are concerned about the potential consequences of such a big hit to earnings occurring now,” stated Chilembo.

“Furthermore, in this extraordinary period we are living through, it is impossible to accurately forecast where we will be even a few months from now. When will we be out of the woods? No-one can tell. We hope that some of the revenue pressures may ease in the months to come. But we are unlikely to be entirely free of them for at least 12 months, and quite probably longer.”


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