Zambia has a lot of work to do in order start achieving inclusive double-digit GDP growth which will go a long way into helping absorb an ever increasing number of the youth population into the job market. One sector which seems to be moving in a positive direction is Copper mining - which accounts for north of 75% of exports and over 12% of GDP. LME Copper prices are up 21% over the last year, closing at $6,712/MT on Friday last week:
Finance Minister Releases the 2016 National Budget
Mr. Speaker, in 2016, Government proposes to spend K53.14 billion, representing 25.8 percent of GDP. This will be financed through domestic revenues of K42.11 billion and grants from co-operating partners of K550 million. Financing will comprise K6.07 billion in net external financing representing 2.9 percent of GDP and net domestic borrowing of K1.75 billion representing 0.9 percent of GDP. Amortisation is projected at K2.66 billion. (Download full document)
Glencore Suspends Copper Mining at Katanga and Mopani Mines for 18 months
Glencore also said it had suspended copper production for 18 months from its Katanga operation in the Democratic Republic of Congo and its Mopani project in Zambia. The decision will remove about 400,000 metric tons of copper cathode from the market, Glencore said. Copper prices rose as much as 1.7 percent in London. (Read more)
"At the moment, none of us can read China” - Ivan Glasenberg, CEO of Glencore on Bloomberg.
2015 has been a tough year for commodities. Unforgiving market conditions saw global copper prices drop by as much as 20% this year to below the $5,000 per MT mark. A slowdown in the Chinese economy (which consumes 40% of global copper output) has been the key driver of this downturn.
LUSAKA, July 24 (Reuters) - Zambia has issued a $1.25 billion eurobond meant for infrastructure development at a coupon rate of 8.97 percent, a government statement seen by Reuters on Friday said. (Read more)
According to the President’s special assistant for PR, the government was looking to raise between $1.5 and $2 billion. An update from the Financial Times indicated that the offering started off with tepid demand at the beginning of the day but picked up significantly toward the end of the trading day with the order book exceeding $2.5 billion. The issuance coincidentally happened on the same day Goldman Sachs revised down their global copper price projections - in a week when commodities from gold to oil were down big!
Kwacha falls to record low against US dollar
The Zambian Kwacha (ZMW) fell 3.5% this week and hit a record low of K7.87 before settling at K7.85 to the US dollar:
Thursday’s Treasury bill (T/bill) auction attracted K464 million in bids with K386 million being allocated:
VAT rule 18 amended
Effective February 23 2014, VAT ‘rule 18’ is set to be amended to include import documents from a transit country as sufficient proof of export as well as scrapping the provision requiring export proceeds to be deposited in Zambian accounts (proof of payment by an intermediary should suffice). For transactions prior to February 23, exporters will be required to fulfil the old rules. [KPMG Zambia release on 20.02.2015]
Halfway into the first month of 2015, here are the key stories and events you need to know from this past week:
Fuel pump prices reduced
The Energy Regulation Board (ERB) has reduced the pump price of petroleum products by K2.29 for petrol; K2.59 for diesel; and K2.08 for kerosene, which translates into 23.13%, 28.22% and 30.76%, respectively. In a statement made available to the media, ERB said that the wholesale prices of petroleum products have been reduced by 35.93%, effective midnight 16th January 2015. Click hyperlink to read the rest. (Source: Lusaka Times)
Konkola Copper Mines (KCM) on the hook for $44m in unpaid electricity bills
Copperbelt Energy Corporation (CEC) recently reduced the power that they supply to Konkola Copper Mines (KCM) over unpaid bills totalling $44 million. According to KCM, the power supply disruption has so far cost them 482 MT of copper worth $3.3 million and has caused the flooding of one of their mine shafts. The Minister of Mines stepped in and ordered KCM to pay the bill and CEC to restore power.
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *