The Patriotic Front in North Western province says Government will solve the problem of illegal mining at Kansenseli gold mine by quickly identifying an investor to operationalise the mine.

This follows the arrest of two illegal miners by Police.

PF Provincial Chairperson Jackson Kungo says the opening of the mine will also provide the youths in the province the much needed employment.

He says it will also give opportunity to the people in the province to benefit as opposed to the people outside the province because those that where engaging in illegal mining had been identified as not coming from the area.

Mr Kungo says the people of Mwinilunga are eager to start seeing the benefits of having a precious mineral resource in their district.

He told ZNBC News in a statement that once fully operational, the economic landscape of Mwinilunga will change as this will widen the revenue base for Mwinilunga Town Council as well as the Central Government.

Meanwhile, Mr Kungo has called on the police to protect the mine site as per the Presidential directive.

He wondered how illegal miners could access the area and continue with mining when officers have been deployed on site.

Source: ZNBC

London ,Thursday, 20th March 2020- Gemfields Executive Director Sean Gilbertson has revealed that Gemfields has incorporated all its Zambian gemstone licences into Kagem Mining Limited,expanding the footprint of its emerald mining operations in Lufwanyama following approval by the Ministry of Mines.

And Kagem / Gemfields mining Limited will construct a skills training facility in Zambia to enhance vocational skills in the area around the Kagem emerald mine.

Mr. Gilbertson made the remarks when he paid a courtesy call on Zambia’s High Commissioner to the United Kingdom his Excellency Lieutenant General Paul Mihova at Zambia House.

“We have confidence in the Zambian Government and this is why Gemfields has transferred the 11 previously wholly-owned gemstone licences to Kagem, which include the Mbuva-Chibolele emerald and the well- regarded Kamakanga emerald deposit. The transfer enhances Kagem’s resource base and production levels, mitigating the risks associated with the volatile nature of emerald mining and achieving economies of scale. Combining these factors with increased employment, revenues and associated royalties, taxes and dividends will boost Kagem’s position as the flag-bearer for Zambian emeralds and the number one producer of emeralds internationally,” he said.

Mr. Gilbertson said the move is to safeguard Kagem’s position as the leading Zambian emerald producer and one that is able to lead the emerald sector internationally especially in light of increased competition, particularly from Colombia.

He said the transfer follows Kagem’s emerald mining licence renewal to a further 25 years starting from December 2019 to April 2045 and would further Kagem’s position as the prominent global producer of emeralds, setting the stage for Zambia to remain the world’s number one emerald exporter.

And Mr. Gilbertson said the emeralds mine will construct a Vocational Training Centre which will function under the auspices of Zambia’s Technical Education, Vocational and Entrepreneurship Training Authority (TEVETA) and once operational, it will be accredited to TEVETA.

Mr. Gilbertson said the facility will include a four- classroom block, administrative buildings, teacher accommodation, and workshops at an estimated USD 1.5 million investment. The Vocational Training Centre (VTC) will provide short-course skills training in the following areas: bricklaying and masonry, carpentry, plumbing, boiler making, electrical wiring and installation and basic information technology.

Meanwhile High Commissioner Mihova has said Zambian emeralds were becoming popular and that it was encouraging to see that Zambia was a major competitor in the industry and called on investors to consider investing in emerald mining.

Kagem/Gemfields have been instrumental in promoting Zambian Emeralds to the world enlisting the help of celebrities such as American actress Mila Kunis to wear Zambian Emeralds on the red carpet.

Issued by Abigail Chaponda (Mrs.), First Secretary | Press and Public Relations, Zambia High Commission in the United Kingdom.

Source: Zambia-UK

The rapid spread of the coronavirus (officially named COVID-19) from its origin and epicentre in the central Chinese city of Wuhan in Hebei Province to elsewhere in China in late January was perhaps the first indication that what began as a health crisis would soon be felt in economic terms by countries around the world. Zambia, with its particularly strong trade links with China, is one of them. 

COVID-19 has since reached hundreds of countries which are now entering into a lockdown of their own, whilst China appears to be leaving the worst behind it. But what so far appears to be a slow return to normality on the Chinese Mainland comes with significant damage to China’s economy, which is expected to see its first drop in Gross Domestic Product (GDP) since 1976, the end of the Mao era.

Mining For Zambia spoke to acclaimed Zambian economist, Professor Oliver Saasa, and asked for his views on how the COVID-19 pandemic will affect Zambia’s mining sector, on which the country’s economy is enormously dependent. 

In an upcoming article, we will look at possible policy measures and responses that Government could implement to mitigate the impending economic damage, and avert a crisis.

Copper inventory levels in China have reached their highest in almost four years, mostly due to a 13.5% decline in the country’s industrial output in a single month, from January to February 2020. The sudden excess in copper supply has sent prices for the red metal tumbling below US$ 5 000 per metric tonne for the first time since October 2016. 

How will this affect Zambia? 

There will be several serious effects. There will certainly be a level of decline in the global demand for copper, and that has led to a lower copper price. The economy of Zambia gets more than 75% of its export receipts from copper, so any reduction in demand will have a serious impact here at home.

Naturally, this means that Zambia’s prospects for growth in 2020 will be affected. In 2019, the government’s projection was a minimum of 4% Gross Domestic Product (GDP), but at the end of last year we posted around 2%. We are a stressed economy that has failed to meet its own set targets by less than half. In terms of projections for 2020, we are hearing figures around 3%. Still, with the coronavirus, we may not reach that.

Then there is the matter of our Foreign Exchange reserves, a pre-existing problem that will only be aggravated. Zambia’s Foreign Exchange reserves stabilised for quite a while at US$1.4 billion, until December 2019. Then they reportedly dropped to US$ 1.2 billion earlier this month. Even at US$1.4 billion, we are still talking about only six weeks of import cover, in terms of reserves in the Central Bank. In the case of a calamity — such as the coronavirus — the extent to which a country can survive without external stimulus is its Foreign Exchange reserves, for importing what we usually need. A decent economy of Zambia’s standard should have 3-4 months of import cover.

To put this in perspective, Botswana has 15 months of import cover. They can survive on their reserves for over one year. If this trend continues, and the virus is not contained, we may reach less than a billion United States dollars in reserves.

Another potential effect on Zambia is related to the fact that China is a major growth country, and countries like ours are extremely dependent on it in terms of commercial interactions. The prospects for renegotiation of our loan repayments to China might be stifled by the fact that its economy has slowed.

Would you please explain why COVID-19 is having such a major effect on the Kwacha’s exchange rate?

The free-fall of the Kwacha is, firstly, because of what is happening in China and elsewhere, in terms of reduced demand and the low price of copper, and its effect on the growth prospects on several larger economies. A substantial portion of our copper exports [usually] go to China. Foreign investors have reduced appetite for Zambian Government Bonds right now, which has affected our dollar liquidity. The market is very nervous at the moment, and there are fears that an economy like Zambia’s that is so significantly dependent on China is not the best investment destination. Secondly, outside our Eurobonds, almost 30% of our sovereign debt is derived from China. Thirdly, China is a major upcoming investor in mining and a number of other sectors in Zambia. 

Fourthly, China is the leader in Zambia’s infrastructural development drive, accounting for around 90% of the large infrastructure investments in Zambia, including road construction. But what’s even more important is the fact that both the money being used to construct these roads as well as the construction companies themselves come from China. 

Anything that affects China negatively — like the stress of the coronavirus on the Chinese economy —  means that not only is road construction going to be affected, but the loan portfolio that actually finances what’s happening will shrink. In other words, the amount of money we can borrow from China will decline. It’s about the interconnectedness and dependence of Zambia on China, and the fact that China has been hit hard economically by the virus. 

The free-fall of the Kwacha can also be explained by factors such as the depleting of Zambia’s Foreign Exchange reserves, and the declining production of copper in Zambia.

The copper price rallied above US$ 6 000 in December 2019, and has now dropped off a cliff, showing a 30% decline since January. Yet, in a new report, Fitch analysts have revised up their 2020 copper price forecast to $5,900/tonne from $5,700/tonne as they now expect increased fiscal stimulus from the Chinese government to lift prices higher over the back half of the year. 

What are your thoughts on this projection?

My view is that it’s possible copper prices will rebound, depending on which countries are hit by the virus, and when. I emphasise “when” in the sense that there are so many unknowns in terms of risk factors. Since cases of COVID-19 were identified in Zambia on 18 March, we are already fearful, but not to the extent that there is havoc. But the faster it spreads in Zambia, the more serious the economic implications will become. 

The panic mode that people (and the government) may go into — stopping movement between cities, for example — would have a serious impact on businesses that are dependent on human movement. The services sector — that’s banking, hotels, retail businesses, public transport services, air travel — accounts for quite a substantial portion of the government’s tax collection. We are already in a fiscally stressed economy, and it will become worse if the coronavirus pandemic is not arrested early. 

In terms of how this may begin to affect the appetite for copper, there are so many unknowns at the moment. As far as mining is concerned, it’s the underlying policy factors that are driving investment away from Zambia’s mining industry, particularly the current fiscal regime for the sector. The impact of coronavirus – that is presently creating oversupply and falling prices – will unfortunately make a bad situation even worse.

“We are already in a fiscally stressed economy, and it will become worse if the coronavirus pandemic is not arrested early.”

So, whether a rebounding copper price will be greeted by increased production by the mining houses in Zambia is a separate question. The answer to that is not clear — it’s more likely not. In 2019, we’ve seen many problems with the fiscal regime. Added to that, because of the Government taking control of Konkola Copper Mines (KCM), that mine’s production dropped by almost 50%. Government complained that no reinvestments had been made by Vedanta, KCM’s majority owner. KCM said that Government had not been paying VAT refunds. The blame game continues in nobody’s interest.

There are many policy challenges within the country that must be addressed. Mines are very concerned about the fiscal regime; they are currently at loggerheads with the government. The year 2019 was so bad that, as a miner, one would need a special sense of humour to reinvest in the industry. 

The coronavirus will have several implications for global trade. What do you see as the main implications?

The coronavirus is ‘risk factor number one’ for the entire global economy at the moment, not only for Zambia. We can’t predict how the market will behave. The stability of the global markets as a result of the virus will be determined by the extent to which the production profile [of goods and commodities] matches the demand profile. The virus will advance from one country to another, and the coping mechanisms will vary too.

“The coronavirus is ‘risk factor number one’ for the entire global economy at the moment, not only for Zambia.”

As a result of the virus, there will be a further reduction in copper production. If people in Zambia are sick — or they are scared of getting sick — they won’t go underground. That will mean that we can’t meet our production targets. If we fail to meet our targets, but demand for copper in destinations like China where we send it are high, that means there will be increased competition for copper, which creates a price escalation. We may discover that, depending on how the global market responds to the virus, things could change pretty fast, which could be inflationary.

Some economies have already cushioned the blow, like the United States (US). During the 2008 crisis, the US state had to step in and give big business big money — which, of course, they repaid later. There are not many governments with deep pockets. The Americans have the capacity to cope, but what about poor Zambia? 

***

Governments around the world are introducing financial rescue packages and tax incentives to ensure the survival of business. As copper prices continue to sink, mines from Chile to Canada are halting operations, and we are likely to see the same in Zambia before long. 

The survival of Zambia’s economy depends directly on the survival of its mining industry. We are in the midst of a pandemic; agendas must go out of the window, as we all pull together. In our next article, we will look at the various economic decisions that are being taken by Governments elsewhere in the world, and consider the options for Zambia.  Until then, stay safe!

Source: Mining for Zambia