Barrick Gold to Upscale Production at Lumwana Copper Mine

 The Canadian-based mining company Barrick Gold has announced that it will be transforming Zambia’s Lumwana copper mine into a ‘Tier One’ asset. Tier One classification means that the mine has been recognised with a reserve potential of greater than 5 million tonnes of contained copper and C1 cash costs per pound in the lower half of the industry cost curve, enabling it to upscale production.

Barrick initially acquired the mine in July 2011 and have been focussing on gradual expansion since 2019, however, due to the recent discovery of new expansion possibilities, the Barrick president and chief executive Mark Bristow said Lumwana’s full potential was “only now being revealed”. 

The Zambian mine is considered as one of the largest copper supplies in the world with an estimated 5.014 billion pounds of proven and probable copper reserves of ore grading 0.68% copper. The mining licence held by Barrick covers 1,355km², which is equivalent to 253,213 football fields or works out to nearly twice the size of Singapore. 

Additionally, informed by an updated geological model and the latest indications of higher ore grades at Kababisa and Kamaranda, Barrick has increased their investment into Lumwana, both upscaling the production and extending the life of the mine from 2042 to 2060. 

Image: Barrick Gold

This investment towards increased copper production will directly result in a greater contribution to the nation’s economy.  

 Investment into the Local Community 

So far, Barrick has purchased approximately US$4.3 billion in goods and services from local Zambian registered businesses since the Lumwana mine went into production in 2011, with $432 million being spent on local procurement expenditure in last year alone (83% of the mine’s total procurement spend). 

Moreover, Barrick has repeatedly directed portions of the mine’s profits into the local Zambian community, adding essential infrastructure to Lumwana’s education, transport, water supplies, hospitals and more. The company has also launched a “Business Accelerator Program” which aims to build the capacity of Zambian contractors in the mining supply chain and increase job security. The program assists their expansion plans, diversifies their markets, and fosters independence and sustainability beyond Lumwana's lifespan.  

Finally, Barrick has significantly contributed to Lumwana’s community through employment, and the mine currently holds industry leading levels of local workers with 99.3% of employees and 98% of contractors being Zambian nationals. Overall, US$176 million has been paid in form of salaries to Zambian nationals since 2019. 

Importantly, as Barrick upscales their production, more money will be spent on local businesses, more donations will be made to the local economy, and more Zambians will be employed- all at a faster rate. 

Photo: BGStock72 / Shutterstock

Future Possibilities  

As international companies and banks look to safer investments due to current economic instability, almost all look towards purchasing shares in gold, with many investing in Barrick, as the world’s second largest gold company.  

Barrick’s growth is encouraging news for the Lumwana mine, meaning that production might even be extended past 2060, and affirming that the probability of the company selling the copper reserve is very low. 

Amazingly, this increased investment comes after the gold giant prepared to sell the copper mine in 2019 due to tax changes under Edward Lungu’s government.  

The previous president attempted to enforce a 5% copper import duty, plans to replace value-added tax with a non-refundable sales tax, and an added royalty on copper productivity. Following this, Barrick broadcast that it was looking into Chinese investors with plans to sell Lumwana by the end of 2019. The sale process was indefinitely halted after the current government introduced tax breaks in 2022, immediately following this Barrick scaled up production, specifically noting that the revised tax regime freed up cash flow to invest in Lumwana. 

In transforming the Lumwana copper mine into a Tier One asset, Barrick aims to achieve the Government’s target of reaching 3 million tonnes (MT) of copper production in the next 10 years through increased investment into the mining process. 

Investment into Zambia

Barrick’s recent investment into Zambia is part of a larger international trend with companies announcing new ventures into the Zambian economy almost daily, signalling an increased level of trust for the stability of the nation’s economy under President Hakainde Hichilema’s administration. 

In an interview discussing the mine, Bristow stated that “We all agree that President HH has brought a certain stability to the country, he has definitely made the country more investable”, a comment which emphasises a global faith in Zambia’s economy and government.