Zambia weekly wrap - september 13 edition

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)

Unfortunately for the two African mines, they are mere pawns on the global chess-board that Glencore is playing on. Suspending copper production for 18 months will reduce global copper output by 400,000 MT over the period. And when other miners cut production (which has begun), global supply will be even further eroded. The combined effects of this should be a rise in copper prices which went up by 3.5% this week after Glencore’s announcement. Supply and Demand 101.

Ivan Glasenberg is only doing his job as CEO of Glencore - his number one priority is to maximize shareholder wealth. Mopani and Katanga accounted for less that 2.1% of parent company Glencore’s $87 billion first half 2015 revenues. It shouldn’t really be a big surprise that they can be taken offline so easily. This one move epitomizes the reason why Zambia should do whatever it takes to diversify its export base.

The only decent news is that that Mopani will retain the majority of its about 20,000 strong workforce (55% contractors) while it suspends copper output and embarks on this expansion/upgrade program.

The Government should refrain from breaking its back to offer special concessions to the mining sector which:

• Has finite projects
  
• Hires a small percentage of the working population (even less with future mechanization)
  
• Consumes over 50% of the country’s electricity at a subsidized rate of $0.0531 per Kwh
  
• Doesn’t contribute enough in taxes
  
• Destroys the environment
  
• The list could go on!
  

A key example of this type of thinking could see the pristine Lower Zambezi National park being destroyed by a 25 year mining project. The decision on whether the project advances is still under litigation. There are plenty of other sectors with a lot more upside which should be receiving special consideration.

Zambia Copper Mining Sector Update - 2015

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.(Read more)


Copper heads for its best week in 4 months as Glencore production cut seen as "circuit-breaker"

Copper fell, halting the metal’s longest rally since June, amid concern that U.S. policy makers will raise interest rates, which could spur gains for the dollar and cut the appeal of commodities as alternative assets.(Read more)


Privatization of Zambian Mines is Root Cause of Power Deficit

Zambia is in the middle of a massive power crisis that began in June and has been getting steadily worse. In Lusaka, where I live, the situation is becoming desperate due to eight-hour blackouts every day. Moreover, the electricity goes off just at the time it is most needed – when families come home from work. 
(Read more)


Government in the Process of Signing 900 MW Worth of Contracts for Renewable Energy

The Government is in the process of signing three contacts for the establishment of renewable power plants in selected parts of the country, State House has disclosed. (Read more)


Ministry of Finance Transfers Ownership of 29/33 State-Owned Entities to IDC

GOVERNMENT has transferred the shares of 29 out of 33 State Owned Enterprises (SOE’S) from the Ministry of Finance to the Industrial Development Corporation (IDC), President Edgar Lungu has announced.
President Lungu said line ministries would now focus on policy making, giving the IDC direct mandate and authorisation to oversee performance and accountability of the SOE’S on behalf of Government.
(Read more)

Dotcom Zambia Secures $500,000 in Funding

Kukula Capital (“Kukula”), a leading Zambian venture capital investor, and eVentures Africa Fund (“eVA”), a leading Dutch venture capital fund specializing in E-commerce in Africa, are pleased to announce the signing of a transaction with Dot Com Zambia, a growing e-commerce company headquartered in Lusaka, Zambia. Kukula and eVA have jointly agreed to initially invest $500,000 / ZMK 5 Million in Dot Com Zambia structured as a combination of debt and equity. (Read more)


Ndola, Zambia, set for a new Marriott-branded hotel

Work has commenced on the construction of a new Protea Hotel in Zambia, located in the city of Ndola opposite the Levy Mwanawasa Stadium along the important Ndola-Kitwe dual carriageway. This hotel will increase the Protea Hotels' presence in Zambia to 8 hotels. (Read more)

Zambia: Agreement On Express Goods Train From Zambia to Beira

The railway administrations of Mozambique, Zambia and Zimbabwe, meeting in the central Mozambican city of Beira on Thursday, agreed to establish an express goods train, running from Zambia to the port of Beira via Zimbabwe.(Read more)


Atlas Mara in Talks to Acquire Finance Bank at Deep Discount

Former Barclays boss Bob Diamond is attempting to buy the biggest bank in Zambia for a knockdown price, but the takeover talks have been mired in difficulties about the business’s controversial history. Diamond’s London-listed Atlas Mara financial services company is looking to buy Finance Bank of Zambia, which is controlled by Rajan Mahtani, one of Africa’s wealthiest men. (Read more)


Government Urged to Remove Import Duties on Mobile Handsets

THE Government should remove taxes on mobile devices like smartphones and tablets in 2016 to increase the Information and Communication Technology (ICT) penetration rate in the country.
A stakeholder, Mutale Mubanga said there is need to remove import duty and the Value Added Tax (VAT) on smart phones and other ICT devices. He said this in his submission to the Ministry of Finance towards the 2016 national budget.(Read more)

Key Data