Zambia Investor Briefing: September 2023

Investor Briefing

8 Nov

Written By Michael Phiri

OVERVIEW

Vedanta will take back ownership of Konkola Copper Mines (KCM), four years after the group was removed from its operations in Zambia by Edgar Lungu’s government. It was announced earlier this month that Vedanta, owned by Anil Agarwal, will invest $1 billion over the next five years to revive KCM. It will also fund $250 million of payments to local creditors of the mine to restore its majority stake.

Albert Halwampa, Director General of the ZDA, has announced pledges by Chinese firms to invest in Zambia to the total of $1.4 billion. This came during President Hakainde Hichilema’s six-day visit to the People’s Republic of China, undertaken to enhance the economic diplomacy between the two countries. There, he addressed the country’s potential investors at the Zambia-China Investment and Tourism Promotion Conference in Jinggangshan, Jiangxi Province. Hichilema’s itinerary also included visits to local authorities, various heads of industry, and investors.

At the G20 Forum in India, the US and the EU pledged their support of the Lobito Corridor Project, a trans-African railway line connecting Zambia and the DRC to regional and global markets through the port of Lobito on Angola’s west coast. As a first step, they will launch feasibility studies for a greenfield rail-line expansion between Zambia and Angola. The US and EU have also promised to upgrade critical infrastructure across sub-Saharan Africa in order to “unlock the enormous potential of this region”. Once completed, the Corridor would offer the shortest route to transport exports such as critical minerals from inland to the coast, and will also greatly benefit the region’s import economy.

Silicon Valley start-up KoBold Metals has said it aims to start producing copper and cobalt in Zambia within 10 years. The company is investing $150 million in its development of a copper deposit at Mingomba in Copperbelt Province. Mfikeyi Makayi, KoBold’s Zambian CEO, said, “It’s a very attractive project and we have said within a decade we would want Mingomba to be a producing mine”. KoBold uses AI to facilitate its search for critical minerals including copper, cobalt, nickel, and lithium.

Zambia has signed a Memorandum of Understanding (MoU) with two Chinese companies – the Development Company of China and the Guangxi Fenglin Wood Industry Group – to launch a 4 million hectare carbon offset venture in the country. Across 5% of all land in Zambia, trees will be planted and forests preserved. This venture will produce 23.25 million carbon credits a year, and the scheme is set to employ of 65,000 people.

In a lecture at the University of Zambia, the International Monetary Fund (IMF)’s Resident Representation Preya Sharma said Zambia’s economic growth had rebounded with inflation at a declined growth rate of 5% compared to 2019’s 1.5%, a great improvement of the country’s medium-term growth prospects.

Vedanta to Resume Production at KCM

Vedanta will take back ownership of Konkola Copper Mines (KCM), four years after the group was removed from its operations in Zambia by Edgar Lungu’s government. It was announced earlier this month that Vedanta, owned by Anil Agarwal, will invest $1 billion over the next five years to revive KCM. It will also fund $250 million of payments to local creditors of the mine to restore its majority stake, as well as a one-time payment of K2,500 to each mineworker.

Vedanta left the mine in 2019 when Lungu, in pursuit of nationalised mining across Zambia, seized control of it. The PF then used its 20% stake to place KCM in provisional liquidation. Since 2021, however, Hichilema’s government has been making efforts to reanimate the copper sector. This deal struck with Vedanta to restore KCM’s mining operations is one of the many new government initiatives to drive growth in the mining sector.

Anil Agarwal, Vedanta’s owner, said that the goal of the mining company would be to “become a fully integrated producer of copper and cater to India’s fast-growing demand while also making Zambia the leading producer of copper in the world”. Vedanta has pledged to double annual production to 100,000 tonnes, with the goal of reaching 200,000 tonnes as quickly as possible.

Chinese Firms to Invest $1.4 Billion in Zambia

Albert Halwampa, Director General of the ZDA, has announced pledges by Chinese firms to invest in Zambia to the total of $1.4 billion. This came during President Hakainde Hichilema’s six-day visit to the People’s Republic of China, undertaken to enhance economic diplomacy between the two countries. There, he addressed the country’s potential investors at the Zambia-China Investment and Tourism Promotion Conference in Jinggangshan, Jiangxi Province.

Hichilema’s itinerary also included visits to local authorities, various heads of industry, and investors. Upon his return, Hichilema announced the economic relationship between the two countries had been upgraded to a Comprehensive Strategic and Cooperative Partnership, with special focus on the areas of mining, agriculture, clean energy, and infrastructure.

The investments by Chinese firms in Zambia include: $800 million by Pingxiang Huaxu Technology for a wind and solar power project; $450 million for a photovoltaic solar project in Lusaka; and $290 million in lithium battery manufacturing by Jiangxi Special Motor Company.

Diplomatic highlights of Hichilema’s visit included meetings with President Xi Jinping and Zhao Leji, Chairperson of the Standing Committee of the National People’s Congress. The Zambian president also met with China’s Prime Minister Li Qiang, and expressed his “deep appreciation” for Li’s leadership during Zambia’s complex debt restructuring negotiations.

OTHER NEWS

Zambia’s copper FDI deal positive for growth and external liquidity 12.09.23, Fitch Ratings

Hope for Zambia’s path to sustainable development 15.09.23, United Nations

China, Zambia to encourage greater use of local currency in trade, Chinese state media report 15.09.23, Reuters

Liquid Intelligent Technologies Zambia launches Azure Stack, heling businesses access cloud solutions that meet local compliance requirements 21.09.23, African Business

China and Zambia: A new chapter beyond debt? 22.09.23, The Diplomat

United States supports construction of Mukungule Community Resource Board Office 22.09.23, African Business

Europe lines up African minerals pact to ease reliance on China 27.09.23, Bloomberg

UPCOMING EVENTS

AFSiC: Investing in Africa - 09-10.10.23, London ,UK

FT Africa Summit - 12.10.23, London, UK

UK-DRC Energy Transition Investment Forum - 16.10.23, London, UK