Two years of HH has brought a wave of optimism to Zambia
Analysts anticipate that mining investors will flock to Zambia, still one of the biggest copper producers globally, especially since President Hakainde Hichilema came into office in August 2021 and announced a range of incentives, such as a sliding royalty rate for mines, to lure back investors.
Hichilema, or ‘HH’ as the investor community call him, has announced that he wants Zambia’s mining sector to be the country’s foremost revenue generator. He subsequently set a target to increase its copper production from 800,000 tons a year to three million tons a year in the next three years – a bold aim, especially since the Konkola and Mopani copper mines haven’t resumed production yet.
But overall, Zambia’s mining sector appears to be on track for renewed activity from international mining companies. In 2022, First Quantum Minerals announced $1.35bn worth of new projects in the country, while Anglo American announced a return to full-scale copper exploration after it signed a provisional joint-venture agreement with Aim-listed mining and exploration company Arc Minerals. In addition, KoBold Metals, a Californian-based metals explorer, is busy raising $200m to develop the copper reserves it recently acquired in Zambia, the Wall Street Journal reports.
The projects announced by both these miners are a sure vote of confidence in the Hichilema administration.
Exploration is an equally important aspect of Hichilema’s investment drive into Zambia’s minerals sector and the government is currently doing geological mapping for the remaining 45% of the country, while the existing 55% will be updated.
Unfortunately, Hichilema has also had to deal with numerous problems since he took over the reins from the Lungu presidency, an era in which mining companies faced insecurity of tenure, high royalty rates, and the withholding of VAT refunds.
Delivering on promises has been harder and slower than anticipated, says Marcus Courage, CEO of Africa Practice. It has involved drawn-out negotiations with creditors for debt restructuring, cleaning up the country’s cadastral system after widespread licensing corruption, restructuring Mopani, settling the Konkola disputes, and addressing the power crisis. “These things are all taking much longer than anticipated,” says Courage.
The mining cadastre was subject to a detailed audit over eight months. They went through every single major licence with a fine toothcomb and threw out those that hadn’t been properly awarded – Nick von Schirnding
The administration is doing its best to clean up various practices and set the country on a new course, says Nick von Schirnding, director and executive chairperson of Arc Minerals. “But changing a supertanker takes time.”
Investor perception also takes time to change, and the dubious way in which mining and exploration licences were acquired under the Lungu presidency could still deter investors. Also, under previous presidencies, mining rights were at times taken away. “This can put investors off. Once bitten, twice shy,” said one mining executive who asked to remain anonymous.
The best thing Zambia can do for its investor community is secure a stable policy environment, even though its taxes are some of the highest in the world.
Peter Leon, partner and Africa chairperson at Herbert Smith Freehills, said the country’s debt issues have not been a significant deterrent for would-be investors, but rather its ever-changing royalty rates, which needs to be fixed.
Leon’s view is that Zambia’s mineral legislation is sound, the government is committed to good governance and the rule of law, while the country has a lot more policy certainty than South Africa.
Time is of the essence though. There is a question mark over how realistic a three million tons a year copper production target is, says Leon. He also notes that Hichilema has two years left in office and if the economy hasn’t grown as he has promised he might not be re-elected, although Zambia’s recent debt deal is just what is needed.
A rosy future?
The good news is that, after lengthy negotiations that lasted close to three years, Zambia finally secured a deal on 22 June to restructure its more than $6bn debt. In terms of the restructuring agreement, Zambia’s debt will be rearranged over more than 20 years with a three-year grace period during which only payments on interest are due, Reuters reports. The agreement with its official creditors means the country will receive a $188 million loan from the International Monetary Fund as part of a $1.3bn package that was approved in August 2022.
There are also indications that the long-standing issues with Konkola and Mopani respectively will be resolved by the end of 2023. An insider close to the process said an agreement between Vedanta and Zambia Consolidated Copper Mines, which is 77%-government-owned, is imminent on Konkola. “In government we’re saying: ‘You can’t mine in the courts.’ You have to be pragmatic. The negotiations have been difficult, but the intention is to reach an agreement by the end of the year.”
Konkola currently produces less than 100,000 tons of copper a year, because of a lack of investment. But once a deal has been concluded, the Konkola Deep Mining Project, which has a nameplate capacity of 300,000 tons a year, can be initiated.
With Mopani the process is less complicated, and the Zambian government is currently in possession of bids from four shortlisted potential buyers: China’s Zijin Mining and Norinco Group, Sibanye- Stillwater, and an investment vehicle owned by former Glencore employees. A final bid will take place in mid-July and a deal is expected to be in place in October this year. Mopani’s production is currently around 80,000 tons a year – a far cry from its potential 225,000 tons.
“We have seen similar moves in Botswana and Namibia towards transparency through a public mining cadastre — and even some movement in South Africa in this direction. So Zambia’s success in rolling out this facility certainly seems to be having a positive effect across the region — Desmond Mossop, SRK.
Both Konkola and Mopani are in the fortunate position that they’re not resource-constrained and with more investment, production could be ramped up.
With the clean-up of Zambia’s mining cadastral portal completed, the country is well-positioned to attract new investment, says Courage. “The queues outside the cadastre office stretched around the block.”
“We have seen similar moves in Botswana and Namibia towards transparency through a public mining cadastre — and even some movement in South Africa in this direction,” says SRK Consulting partner Desmond Mossop. “So Zambia’s success in rolling out this facility certainly seems to be having a positive effect across the region.”
Von Schirnding says he is thoroughly impressed with the speed with which the Zambian government is turning things around. “The mining cadastre was subject to a detailed audit over eight months. They went through every single major licence with a fine toothcomb and threw out those that hadn’t been properly awarded. They replaced almost the entire staff complement of that office. It’s real proof that there’s a desire to change.”
Zambia and the DRC’s plans for collaboration on electric vehicle battery production are also gaining momentum, with the US and Afreximbank “waiting in the wings” to provide concessional funding. Feasibility studies are being conducted to establish two special economic zones for battery manufacturing purposes, Courage adds.
“Many of the world’s largest mining companies like what they hear from Hichilema. They see a government that understands the needs of investors. The president recognises the opportunity to capitalise on the surging demand for copper,” says Courage.
Hichilema is a breath of fresh air, says Von Schirnding. “The government is being very sensible and proactive. When you operate in any jurisdiction you need an established mining framework which governs the awarding of licences and mining regulations. The second thing is you need the rule of law that will enforce those regulations. Those are the key building blocks when entering into any country.”
This article originally appeared on Mining MX.
Vedanta to Resume Production at Konkola Copper Mines with $1 Billion of New Investment
Zambia’s government has agreed a deal that will return ownership of the Konkola Copper Mines (KCM) to Vedanta, four years after the group left the mine, as part of new initiatives to drive massive growth in the mining sector.
In 2019, then-President Edgar Lungu’s pursuit of nationalised mining involved seizing control of KCM from Vedanta, with the Popular Front (PF) government using its 20 per cent stake in the mine to place KCM in provisional liquidation.
Vedanta launched a legal battle, and KCM struggled under state control. Incentives under PF rule such as royalty increases, double taxation and import levies thoroughly undermined the profitability of the Zambian mining sector. As opposition presidential candidate, Hakainde Hichilema assured voters he would restore the major contribution Zambia’s mines had once made to the economy.
Edgar Lungu lost his bid for re-election in 2021 to opposition leader Hakainde Hichilema and his UPND ‘New Dawn’ party. It was reported in June 2022 that President Hichilema’s government was looking for a new investor in KCM and other major mines, as part of efforts to reanimate the copper sector.
Minister of Mines and Minerals Development Paul Kabuswe said in November 2022 that any solution for KCM would have to involve Vedanta. Last Friday, Kabuswe told reporters that he was “counting days, it’s no longer months”, referring to the return of Vedanta.
With KCM back under its ownership, Vedanta is pledging investments totalling $1 billion over five years to revive the site, a key clause in the government’s conditional agreement with Vedanta.
Copper at the Vedanta KCM warehouse. (Bloomberg)
Vedanta will also finance payments totalling $250 million to local creditors of the mine, in order to restore its majority state. The group will also increase KCM mineworker salaries by 20%, and issue a one-time payment of K2,500 to each mineworker.
Announcing the deal, Mines Minister Paul Kabuswe said, “Vedanta will return to run and resuscitate the operations of KCM as the majority shareholders”.
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.
Zambia is currently the second-largest producer of copper in Africa, and the seventh largest in the world. Its ore deposits are among the highest quality and largest in the world. Many of its deposits have yet to be mined, owing to historical largely open pit mining not affecting deeper veins of copper ore.
Zambia’s copper offers opportunity for new mining innovation and investment as the green energy revolution continues to gain pace. Demand for copper, as a conductive metal present in almost all electrical components, is increasing at an unprecedented rate. It is estimated that the global copper industry needs to invest more than $100 billion in mines to match the world’s annual supply by 2030, a major opportunity for copper-rich nations such as Zambia.
Zambian copper ore. (Copperbelt Katanga Mining)
Looking to capitalise on copper demand, the government has committed to enormous increases in output, as a strategy to rapidly develop Zambia’s economy through increased export trade and local employment. President Hichilema has set Zambia the target of more than tripling its copper production over the space of a decade.
Zambia, which produced 800,000 tonnes of copper last year, aims to be producing more than 3 million tonnes by 2032. Kabuswe and the Mining Ministry have brokered a series of contracts designed both to achieve this goal while enriching local populations.
Canadian-based mining company Barrick Gold raised the classification of Zambia’s Lumwana copper mine to ‘Tier One’, signifying reserves of more than 5 million tonnes, in July 2023, after investing more than $4.3 billion into its Zambian sites.
British firm Moxico Resources committed $100 million to expanding the Mimbula Minerals copper leaching plant this March, creating 900 new jobs and maximising the efficiency of some of Zambia’s largest mines in the process. Mimbula is expecting to increase its extraction rate by more than five times its current output.
In December 2022, President Hichilema announced an agreement worth $150 million with KoBold Metals, a US-based artificial intelligence firm, to explore and develop the vast underground deposits of Mingomba mines, estimated to contain 246 million tonnes of copper and cobalt ore at a grade six times higher than that found in Chile, currently the world’s top copper producing nation.
Mingomba copper mine, where KoBold metals has begun to explore underground deposits. (Mining for Zambia)
Zambia is not just expanding its contribution to the green revolution; the country has also been brokering bilateral deals to accelerate its own transition to renewable energy. These deals intend to expand and diversify the renewable energy self-sufficiency of Zambia, which currently relies on hydropower for 80% of its energy.
In February, President Hichilema and a UK energy commission finalised a $2 billion green energy joint ventures agreement, designed to drive sustainable economic growth, known as the Green Growth Compact. Two months later, Abu Dhabi renewable energy firm Masdar signed a joint venture agreement with ZESCO, Zambia’s state owned power company, to develop solar energy capacity worth $2 billion in Zambia.
President Hichilema’s Top 5 Economic Achievements
Hakainde Hichilema took the oath of office as Zambia's seventh president two years ago on August 24, 2021. Following a decade under the rule of Edgar Lungu’s Patriotic Front Zambia's economic and democratic standings had deteriorated considerably. The PF government had defaulted on its Eurobond debts in November 2020 (becoming the first country do so during the Covid-19 pandemic); corruption was widespread and the opportunities for democratic expression had been savagely curtailed. Hichilema’s win was, therefore, embraced by many Zambians as a ‘New Dawn’: an opportunity for economic recovery and to restore democratic ideals.
As the two-year anniversary of Hichilema being sworn in passes, how has the president and his government increased the stability of Zambia and promoted the country and its citizens to global investors?
This article looks back on Hichilema’s defining achievements in reforming and improving Zambia’s economic status.
5. Closer Engagement with the Private Sector.
The private sector generates jobs and income and plays a vital role in delivering infrastructure and social services for Zambia. However, when Hichilema entered office in 2021 Zambia’s investment landscape was perceived as largely unstable. Hichilema and his government have since worked tirelessly to assist the growth and development of the private sector.
In April 2022, the government unveiled the Public-Private Dialogue Forum (PPDF). This innovative conference mechanism has enhanced the role of the private sector within Zambia, accelerating economic advancement. The PPDF works by promoting collaboration between stakeholders and private sector companies.
Patrick Kangwa, Secretary to the Cabinet, emphasised how Zambia's private sector was being held back from its potential as a pivotal driver of economic advancement and how the forum acts to remedy private sector limitations through the systematic identification of constraints in Zambia’s market.
Since PPDF’s debut, the forum has introduced a National Arts Policy which provides creative infrastructure through nationwide centres such as the Lusaka Arts Contemporary Centre, to promote Zambia’s global artistic standing. Additionally, the forum has acquired US$1.3 billion for Zambia’s health sector for the period 2023 to 2025, enabling Zambia to carry out internationally ground-breaking research in the fields of sexual reproductive health, HIV and AIDS and mother and child health.
In March 2023, President Hichilema again tightened cooperation between the private and public sectors by creating the Presidential Delivery Unit (PDU).
The PDU works with existing resources in an accelerated manner, through strategic prioritisation of specific economic value streams. This optimises workflow by removing operational and logistical delays that have previously impeded progress.
Since entering office, the New Dawn government has frequently collaborated with global economic forces to improve the private sector. Notably, the government hosted forums with the European Union and China last year, in May and October respectively, to encourage investment and trade opportunities in Zambia.
As a result of these forums, the EU invested €110 million to advance education, health, and green energy in Zambia in 2022. Likewise, more than 600 Chinese businesses invested over US$3 billion in Zambia, increasing the bilateral trade volume between the two countries to $3.76 billion in the first half of 2022 - up nearly 40% compared to the previous year under Lungu’s administration.
4. Bolstering investment in the mining sector
Mining is a crucial engine for Zambia’s economy, with copper trade alone accounting for over 60% of the country’s exports. President Hichilema has the clear objective of increasing the country's copper production. His goal is to triple the current output, which means expanding it from 800,000 tonnes per year to 3 million tonnes within a decade.
In 2023, Hichilema’s consistent work towards repairing global trust in Zambia’s mining industry manifested in two major investments from companies which previously held doubts about the stability of the market.
In July, Vedanta Resources regained control of Zambia's Konkola Copper Mines (KCM) signalling a restored partnership between the Zambian government and Vedanta after the relationship broke down under Lungu’s administration which culminated in a state take-over of the KCM assets and forced liquidation in May 2019. Vedanta has promised to increase investment and execute new social responsibility programmes.
Similarly, Barrick Gold announced in 2022 that it will be transforming Zambia’s Lumwana copper mine into a Tier One asset, a move which will significantly help the government to reach their target of 3 million tonnes. Amazingly, this increased investment comes after the gold giant prepared to sell the copper mine in 2019 due to tax changes under PF’s government. In an interview discussing the mine, Barrick president and chief executive, Mark 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 renewed global faith in Zambia’s economy and government.
On top of restoring and improving previous partnerships, Hichilema has attracted new business partners to the mining sector who have bought innovative new technology to Zambia. In July this year, the Silicon Valley start-up KoBold Metals embarked on a $150 million exploration project in Chililabombwe.
The company employs pioneering artificial intelligence technology to guide drill placement. KoBold's investors include Breakthrough Energy Ventures, a climate and technology fund co-founded by Microsoft's Bill Gates and backed by Amazon's Jeff Bezos and Virgin's Richard Branson, reflecting a trend of non-traditional mining investors addressing the global copper shortage driven by a transition to cleaner energy sources.
3. First Quantum Minerals Deal
Out of Hichilema’s mining successes, the most significant deals from his time in office are undoubtedly with First Quantum Minerals (FQM), a global mining company with operations in nickel, gold, and cobalt.
In July, FQM officially commenced production at their Enterprise nickel mine situated in the Zambia’s North-western Province. The mine is expected to upscale annual production to nearly 30,000 tonnes of nickel over the next two years, making Zambia the continent's largest producer of the metal used in making batteries for electric vehicles, the company told reporters.
Furthermore, FQM have publicly acknowledged Hichilema’s efforts to restore the stability of Zambian investment, with the company attributing their $1.25 billion expansion at Kansanshi Copper Mine to a “renewed confidence” in Zambia's economic climate due to the governance of Hichilema and his party.
Subsequently, the Kansanshi mine has emerged as the largest copper producer in Africa, contributing significantly to the socio-economic landscape by generating over 13,000 jobs for the local Zambian populace. As part of its commitment to the community, FQM is also providing 6,000 free school lunches and protecting nearby wildlife reserves.
These increases will soon make Zambia the largest producer of the metals needed to manufacture batteries for electrical vehicles, a prospect which aligns with the government’s intention to become a major player in the emerging market of EV batteries.
2. Powering an electric future
The International Energy Agency anticipates that the demand for lithium will be forty times higher, graphite twenty-five times higher, and nickel and cobalt approximately twenty times higher in 2040 than in their respective levels during 2020. This will primarily be driven by the manufacturing of clean energy technologies, such as batteries for electric vehicles (EVs). Zambia, as a leading producer of critical metals, has entered into an official partnership with neighbouring Democratic Republic of Congo (DRC) to bolster and elevate the EV industries of both nations.
Last year, the United Sates signed a memorandum of understanding (MoU) with DRC and Zambia to strengthen electric vehicle battery value chains. The MoU affirms the US’ commitment to upholding the United Nations’ standards for preventing, detecting, and addressing corruption at every stage of the supply chain.
Development continued this year in April when African Export-Import Bank (Afreximbank) and the United Nations Economic Commission for Africa (ECA) signed a framework agreement with DRC and Zambia for the establishment of special economic zones for the production of electric vehicles and batteries as the continent looks to add value to surging demand for its critical minerals.
Zambia’s cooperation with DRC is important as the two countries have major reserves of some of the critical minerals needed to produce batteries for electric vehicles and other technologies key to the green energy transition. The DRC accounts for approximately 70% of global cobalt supply and 88% of cobalt exports. Together, the two countries hold 11% of the world’s copper, as well as significant reserves of lithium.
To date Zambia and the DRC have largely served as exporters of these critical raw materials to foreign manufacturers. Now however, Afreximbank and ECA will lead the establishment of an operating company in consortium with public and private investors and Afreximbank’s impact fund subsidiary, the Fund for Export Development in Africa. This new company will develop facilities dedicated to the production of battery precursors, batteries, and electric vehicles within special economic zones in Zambia and the DRC. This will ensure a shorter supply chain for businesses and more, better paying jobs for the people living nearby.
1. ‘Historic’ Restructuring of Zambian Debt
The heavy impact of high interest loans acquired by President Lungu’s government has so far constrained Hichilema’s ability to develop social programs and crucial infrastructure, which are key factors driving economic growth. By restructuring its Eurobond debt, the New Dawn government has reduced the burden of debt repayment, allowing it to reimburse creditors over an extended period or with reduced interest rates.
In June, the government of Zambia confirmed that an accord had been reached with its official creditors for the restructuring of a total of USD 6.3 billion in loans. The terms of the arrangement entail the implementation of a three-year grace period, during which only interest payments will be required, alongside an extension of the loan maturities to a duration exceeding 20 years. The deal was hailed by French President Emmanuel Macron as ‘historic’.
The debt restructuring has eased Zambia’s debt service burden and has the potential to significantly enhance the country’s monetary and fiscal stability and help revive capital inflows.
Following Zambia's successful negotiations with bilateral creditors to restructure debt in June, the country returned to the process of bond restructuring, this time with 15 European and U.S.-based institutions who collectively held around 45% of Zambia's Eurobonds.
This restructuring allows the Zambian government more fiscal space to operate in and increases the reserves available to invest in crucial developments and social expenditure. This increased budget directly contributes to the lives of Zambian citizens with advancements in transport, agriculture, and health, all improving the country’s economic landscape, and therefore enabling more people to rise above the poverty line. Moreover, small and medium businesses in Zambia are granted greater accessibility to venture capital funding, resulting in higher levels of Zambian profit.
Zambia Investor Briefing: August 2023
OVERVIEW
• President Hichilema visited Israel at the start of this month, the third such trip by a Zambian head of state in the past decade. The President met with both Israeli Prime Minister Benjamin Netanyahu and President Herzog to discuss trade, peace and security between the two countries. Herzog labelled relations “outstanding”. Hichilema attended the Israel-Zambia Business Forum in Jerusalem, which focused on opportunities in Zambia’s agricultural sector.
• UK Foreign Secretary James Cleverly was welcomed to State House, marking the first such visit in more than 30 years. The Foreign Secretary announced the expansion of the UK’s clean energy partnership with Zambia, which includes up to GBP 2.5 billion worth of British investment in Zambia’s mining, minerals, and renewable energy sectors, in addition to GBP 500 million in British government-backed investments.
• The World Bank’s Country Director for Malawi, Tanzania, Zambia and Zimbabwe met with President Hichilema as part of a broader visit to the country. Nathan Belete held meetings with the ministers for tourism, trade, finance, and infrastructure, in addition to his time with the President.
• Mines and Mineral Development Minister Paul Kabuswe signed a joint declaration with Japan’s Economy, Trade and Industry Minister Yasutoshi Nishimura in order to strengthen cooperation in the mining sector. The two countries have agreed to expand cooperation in the exploration of minerals via satellite, particularly copper, cobalt and nickel, which are essential for electric vehicles and other products.
• The outgoing European Union Ambassador to Zambia, Dr Jacek Jankowski, has told President Hichilema at his final official press conference at State House that his efforts are “really highly appreciated by the European Union”, and described Zambia as an “amazing country”. Hichilema thanked the EU for the part it has played in strengthening Zambia’s democratic practices. Dr Jankowski leaves his post after serving the EU in Zambia for four years.
• President Hichilema attended the BRICS Summit in Johannesburg last week in his capacity as Chairperson of the Common Market for Eastern and Southern Africa (COMESA). There, he participated in the Round Table Discussion themed “Promoting African Integration and Jointly Building a High-Level Africa-China Community with a Shared Future”. In a statement, Hichilema called on the Summit “to serve as a stepping stone to enhance coordination between BRICS and Africa, enabling an effective response to our global social, political, economic, and environmental challenges”.
• Talks are ongoing concerning the new core investor for Mopani Copper Mines. Johannesburg-based precious metals producer Sibanye Stillwater has recently announced its plans to bring in a Chinese investor to form a partnership if it wins its bid. The unnamed Chinese company already has a presence in copper mining. Also on the shortlist for the mines is China’s Zijin Mining Group.
President Hakainde Hichilema’s Visit to Israel
President Hichilema visited Israel at the start of this month on a three-day trip, the third such trip by a Zambian head of state in the past decade. The President met with both Israeli Prime Minister Benjamin Netanyahu and President Herzog to discuss trade, peace and security between the two countries. Herzog labelled relations between the two countries “outstanding”.
During the trip, Zambia’s Foreign Minister Stanley Kakubo met with Israel’s Foreign Minister Eli Cohen to discuss Israel’s relations with Africa in general and Zambia in particular. The two signed a framework agreement to strengthen cooperation in medicine, communication, agriculture, and culture.
Hichilema attended the Israel-Zambia Business Forum at Israel’s Ministry of Foreign Affairs, Jerusalem. With a focus on opportunities in the agricultural sector, the delegates explored issues such as water harvesting and irrigation in Zambia.
During his trip, Hichilema also finalised negotiations regarding a $100 million investment in a renewable energy power station in Chibombo, Zambia by Israel’s Gigawatt Global and Gigawatt Wind. The companies now have an Investment License with the Zambia Development Agency (ZDA) and an Implementation Agreement with the Energy Ministry. Gigawatt Global president Yosef Abramowitz described it as “the most significant private Israeli investment in the Zambian economy”.
Britain Agrees Deals with Zambia on Clean Energy and Critical Minerals
Britain’s Foreign Minister James Cleverly conducted a four-day visit to Zambia at the beginning of this month in order to deepen ties between the two countries. It was the first such visit in more than 30 years.
The UK’s Foreign Secretary announced the expansion of its clean energy partnership with Zambia (including a UK-Zambia Green Growth Compact), which includes up to GBP 2.5 billion worth of British investment in Zambia’s mining, minerals, and renewable energy sectors, in addition to GBP 500 million in British government-backed investments.
During his visit to the country, Cleverly toured the Mimbula Copper Mine, where British company Moxico Resources will invest an additional USD $210 million of private sector funding to expand production at the site. He also signed a Memorandum of Understanding (MoU) on critical minerals, laying the foundation for further UK support for the responsible mining of copper, cobalt, and other minerals fundamental to the clean energy transition.
Cleverly said of the agreement, “The UK-Zambia Green Growth Compact and our landmark agreement on critical minerals will support investment between UK and Zambian business, creating jobs in both countries”.
OTHER NEWS
Indebted nations can learn from Zambia’s breakthrough debt deal 01.08.23, The Africa Report
The developing country with a positive trajectory 02.08.23, World Finance
EG Capital welcomes Prosper Africa Catalytic Investment Facility and USAID as new partners is EG-Economic Empowerment Fund 10.08.23, African Business
Zambia’s plan to dig its way out of debt with a copper revival 13.08.23, Financial Times
What a US-DRC-Zambia electric vehicle batteries deal reveals about the new US approach towards Africa 21.08.23, Carnegie Endowment for International Peace
Billionaire Agarwal pledges to pay Zambia creditors before retaking mine 23.08.23, Bloomberg
Sibanye brings in Chinese partner for Mopani Copper Mines bid 29.08.23, Reuters
UPCOMING EVENTS
07.09.23 - Zambia ESG and Sustainable Finance Summit 2023
Livingstone, Zambia
28.09.23 - AfBC: UK-Africa Trade and Investment Summit 2023
London, UK
Sibanye-Stillwater saddles up with Chinese in bid for Mopani Copper
SIBANYE-Stillwater CEO Neal Froneman said he rated his firm’s chances of bidding successfully for Zambia’s Mopani Copper after jointly submitting an offer with a “substantial Chinese copper company”.
“I do think we can involve eastern partners and help resolve a conflict Zambia is dealing with between east and west,” said Froneman in an interview. “Zambia did not request it.”
A decision from Mopani’s current owner, the state-owned ZCCM-IH, was about “two to three weeks away” after which the successful bidder would begin negotiations on a long-term fiscal regime, royalties and a stability agreement, said Froneman.
“One competitive edge is that we can be a bridge between east and west,” said Froneman. “China has spent a lot of money in Zambia and it would be difficult for the government to exclude them. That was one consideration,” he said.
“The other is that we have knowledge of deep-level, labour-intensive mining, and work with communities that are centered around a mine. It is completely different type of community to, say, in the US.”
Bidding has been whittled down from about four or five companies to Sibanye-Stillwater and its partner, and China’s Zijin Mining, he said.
Froneman said that if the bid was successful the partners would embark on a capital reinvestment programme of the asset. But shareholders should not expect ” a large, upfront capital outlay”.
Froneman also raised the prospect of investing in other assets in Africa without sacrificing the company’s strategic intention of diversifying its political risk. “Africa has critical minerals and is under-explored. Not all of Africa fits the bill but Zambia and Botswana do have good perceptions,” he said.
Commenting on merger and acquisition activity broadly, Froneman said the company preferred to invest at the asset level where it didn’t “get sucked into a competitive bidding process”.
Froneman earlier presented Sibanye-Stillwater’s interim results for the six months ended June 30 in which platinum group metal and nickel production declines combined with heavy PGM price declines resulted in a 36% decline in profit to R7.8bn.
However, the company announced it would pay a 53 South African cents per share interim dividend, equal to 35% of normalised earnings – the upper end of its dividend policy. Despite this, Froneman said the company’s board would revisit the dividend policy when it met to decide the final payout for the 2023 financial year.
“We pride ourselves on paying an industry-leading dividend but 3% is not industry leading,” he said of the interim payout. “We can pay out 50% of normalised earnings but the board has to meet to decide it,” he said.
This article originally appeared on Miningmx
Hichilema optimistic BRICS bloc will benefit African continent
Zambian President Hakainde Hichilema says the BRICS bloc will help African countries address the challenges the continent has been battling with over the past years.
Hichilema was addressing world leaders attending the 15th BRICS Summit aimed at strengthening the trade bloc.
The Summit is taking place at the Sandton Convention Centre in Johannesburg.
Leaders have been discussing the role of Africa in relation to strengthening relations between BRICS and Africa.
The Zambian President reiterated calls by other leaders that new reforms are needed in order to address inequalities of the past.
Hichilema says, “We as Zambia see this as a real opportunity to address challenges we kept on talking about for a long time and on many platforms. We need to reform the global world order in particular to address the inequalities associated with critical ingredients to development such as capital.”
The Zambian leader has urged BRICS leaders to fast-track the advancement of technology in the African continent.
He says without access to technology, countries can’t engage in genuine and mutually beneficial partnerships.
Earlier during a media briefing, BRICS Chairperson President Cyril Ramaphosa said BRICS was committed and supported the digital transformation.
“We support the digital transformation in education and TVET space, as each BRICS country is domestically committed to ensuring education accessibility and equity and promoting the development of quality education. We agree to explore 23 opportunities on BRICS digital education cooperative mechanisms, hold dialogues on digital education policies, share digital educational resources, build smart education systems, and jointly promote the digital transformation of education in BRICS countries,” adds Ramaphosa.
Hichilema also used the opportunity to call for peace in the African continent.
The bloc has also called on leaders to resolve conflicts through dialogue.
“Dialogue among political parties of BRICS countries plays a constructive role in building consensus and enhancing cooperation. We note the successful hosting of BRICS Political Parties Dialogue in July 2023 and welcome other BRICS countries to host similar events in the future,” adds Ramaphosa.
The African continent continues to experience conflicts.
In July, Niger President Mohamed Bazoum was overthrown following a coup by mutinous soldiers.
Meanwhile, in Sudan, more than 1 million people have been forced to flee Sudan to neighbouring states.
According to the United Nations, people inside the country are running out of food and are dying due to a lack of healthcare after months of war.
This article originally appeared on SABC News
BackChat Ep.3: Cisanga Mwanza
Episode 3 of BackChat sees Choolwe Chibomba speak with Cisanga Mwanza of Chilengedwe discuss all things environmental sustainability and the positive change the sector has seen since President Hichilema came into office in 2021.
BackChat Ep.2: Mulenga Mutati
This week, Choolwe Chibomba speaks with Mulenga Mutati of Gralix Actuarial Consulting on his experience of working in Zambia and the positive impact that President Hakainde Hichilema has had on the investing climate.
BackChat Ep.1: Kapalasa Job Phiri
The first episode of our new business interviews series BackChat features Kapalasa Investments CEO Kapalasa Job Phiri. He spoke with Zambia Is Back spokesperson Choolwe Chibomba about his success and why now is the time to invest in Zambia.
Britain agrees deals on clean energy, critical minerals with Zambia
LONDON, Aug 3 (Reuters) - Britain on Thursday said it had agreed deals with Zambia on clean energy and critical minerals as foreign minister James Cleverly ends a four-day visit to Africa to deepen ties.
Cleverly has used the trip, which fell shortly after a coup in Niger, to seek to enhance Britain's sway in Africa, welcoming regional talks on the Niger crisis and announcing support for Nigeria's agriculture sector.
The foreign ministry said Cleverly would agree a UK-Zambia Green Growth Compact, aimed at generating 2.5 billion pounds ($3.17 billion) of British private sector investment in Zambia's mining, minerals and renewable energy sectors alongside 500 million pounds of government-backed investments.
"The UK-Zambia Green Growth Compact and our landmark agreement on critical minerals will support investment between UK and Zambian business, creating jobs in both countries," Cleverly said.
Zambia is a major copper producer, and also has deposits of critical minerals such as cobalt, manganese and nickel. Last year Britain emphasised the importance of diversifying its supply chains in a critical mineral strategy.
Cleverly will visit a copper mine in Zambia and sign a memorandum of understanding (MoU) on critical minerals, which Britain said would "lay the foundation for further UK support for the responsible mining of copper, cobalt and other metals essential to the global clean energy transition."
Britain has agreed to deepen collaboration on critical minerals with other countries such as the United States, Japan, Australia, Kazakhstan and Saudi Arabia.
This article originally appeared on Reuters
Zambia Investor Briefing: July 2023
OVERVIEW
Zambia hosted it’s 57th International Trade Fair (ZITF) from 28 June to 4 July under the theme ‘Stimulating Economic Development Through Partnership, Trade and Investment’. The fair was attended by King Mswati III of Eswatini as its guest of honour, who called for closer trade collaboration between the two countries.
President Haikande Hichilema visited Ghana, where he signed nine Memoranda of Understanding (MoU) with President Akuffo-Ado on behalf of their respective countries. These MoU cover various industries, including trade and investments, tourism, arts and culture, science and technology, and skill development.
Zambia has signed two Memoranda of Understanding (MoU) with the United Arab Emirates. The first was signed by Minister of Mines, Paul Kabuswe, and concerns mineral resource exploration between the two countries. The second, regarding increasing support for Small and Medium Enterprises (SMEs), is worth US$15 million. The signing ceremony was presided over by President Hichilema and the UAE’s Minister of State for Foreign Affairs Sheik Shakboot Al Nahyan.
President of the African Development Bank (AfDB) Group, Dr Akinwumi Adesina, met with President Hichilema as part of his two-day official visit to Zambia. They discussed further support for the country in the aftermath of its successful $6.3 billion debt restructuring for bilateral creditors. The Bank has committed to several measures to assist Zambia in its economic recovery. These include an initial budget support of up to $150 million. Adesina told Hichilema, “Zambia is back. Zambia is bankable; and you, Mr President, you are bankable. You can count on the African Development Bank’s support all the way”.
Early July saw the announcement that a group of investors led by commodity trader Trafigura Group plans to invest up to $555 million in a railway project designed to link the Angolan port of Lobito to the Democratic Republic of Congo. The consortium is known as Lobito Atlantic Railways. The US has pledged to help finance the project according to its International Development Finance Corporation CEO Scott Nathan. Using the Caminho-de-Ferro de Benguela railway, the route will provide faster trade to Europe and the Americas from the DRC and Zambia.
On 12 July, President Hichilema participated in a virtual meeting for the Committee of African Heads of State and Government on Climate Change (CAHOSCO) on the Africa Climate Summit (ACS), cohosted by President William Ruto of Kenya and Mousa Faki Mahamat, Chairperson of the African Union Commission. Hichilema stressed Zambia’s commitment to the green investment agenda, describing private sector investment as a way of “implementing the continent’s transition towards a low-carbon development pathway”.
African Development Bank (AfDB) Group Visit to Zambia
President of the African Development Bank (AfDB) Group, Dr Akinwumi Adesina, met with President Hakainde Hichilema as part of his two-day official visit to Zambia. They discussed further support for the country in the aftermath of its successful $6.3 billion debt restructuring for bilateral creditors.
Adesina congratulated the Zambian government for reaching this agreement. He told Hichilema, “You have created a sense of hope in the country and confidence in the economy, paving the way for investments to return and accelerate the drive for prosperity for the country”.
The Bank has committed to several measures to assist Zambia in its economic recovery. These include an initial budget support of up to $150 million, and investment projects in key areas of the economy, including energy, agriculture, and transport. Also offered in assistance to Zambia are the services of the Africa Legal Support Facility (ALSF), which is able to offer aid in renegotiating the terms and conditions of external debt with private creditors.
Adesina told Hichilema, “Zambia is back. Zambia is bankable; and you, Mr President, you are bankable. You can count on the African Development Bank’s support all the way”.
Hichilema’s State Visit to Ghana
President Hichilema visited Ghana on a state visit earlier this month. There, he signed nine Memoranda of Understanding (MoU) with President Akuffo-Ado on behalf of their respective countries.
These MoU cover various industries, including trade and investments, tourism, arts and culture, science and technology, and skill development. Significant among them was the MoU signed between the Zambia Chambers of Commerce and Industry (ZACCI) and the Ghana National Chamber of Commerce and Industry (GNCCI) to strengthen trade and investment cooperation.
Other MoU were concerned with matters such as the preventing the trafficking, supply, and consumption of illegal drugs, and one was dedicated to fostering collaboration in the exploration and exploitation of hydrocarbon resources.
Also on Hichilema’s itinerary was a State Banquet hosted by Ghana’s President and a visit to Valley View University of Ghana, where the Zambian President was awarded an honorary degree of Doctor of Human Letters.
Digging Deeper
Production started this month at First Quantum Minerals’ (FQM) Enterprise mine in North- Western Province – the largest nickel mine in Africa. It follows an investment of $100 million by FQM last year to bring the project online. The mine is expected to produce 32,000 tons of nickel over the next two years, making Zambia the largest producer of nickel for electric vehicles on the continent.
This comes amidst a busy month for mining in Zambia, with the government due to announce a new core investor for Mopani Copper Mines imminently. China’s Zijin Mining and Norinco Group, as well as South Africa’s Sibanye Stillwater are all in the running. Getting Mopani running at full capacity is a cornerstone of President Hichilema’s ambition to increase Zambia’s copper production to 3 million tonnes by the end of 2032.
Elsewhere, Barrick President and Chief Executive Mark Bristow has said the true potential of the company’s Lumwana copper mine is only now being revealed. Additional expansion opportunities, identified through an updated geological survey, are currently being assessed anddrilling at the Kababisa project highlights potential flexibility through higher grades. Lumwana is currently on track to achieve 2023 production guidance as the operation ramps up, the Malundwe pit is reopened, and the facility transitions to owner miner operations.
Barrick’s Lumwana copper mine in Zambia gearing up for the future
Barrick’s drive to transform the Lumwana copper mine in Zambia into a Tier One asset with a life extending beyond 2060 is picking up speed with a strong performance in the past quarter adding impetus to its continuing production ramp-up.
Briefing media at a site visit here on July 7, Barrick President and Chief Executive Mark Bristow said the mine’s full potential was only now being revealed. Additional expansion opportunities, identified through an updated geological model, are currently being assessed, while drilling at the Kababisa prospect highlights potential mining flexibility through higher grades. The Lumwana pre-feasibility study is progressing in line with its plans to transform its long-term copper profile through the delivery of the envisioned super pit.
“Since Barrick refocused its strategy in Africa in 2019, Lumwana has become a key element in the expansion of our strategic copper portfolio and a significant contributor to our bottom line. At the same time its importance to Zambia has grown. Since 2019 it has contributed more than $2.3 billion to the country’s economy in the form of royalties, taxes, salaries and purchases from local suppliers,” he said.
Barrick has a global policy of sourcing its suppliers locally and last year it spent $432 million, 83% of its total procurement, with Zambian suppliers and contractors. It has also launched a ‘Business Accelerator Program’ to build the capacity of Zambian contractors in the mining supply chain.
Similarly, Barrick is committed to local employment. Currently 99.3% of Lumwana’s employees and 98% of its contractors are Zambian nationals, both industry-leading statistics. Lumwana is a participant in the United Nations’ REDD+ project, which is designed to reduce greenhouse gas emissions from deforestation, and the mine has engaged with its communities on this initiative.
Looking at the mine itself, in the presentation accompanying the announcement, Barrick said that Lumwana is on track to achieve 2023 production guidance as the operation ramps up after the wet season, reopens the Malundwe pit, and smoothly transitions to owner miner operations. There is also a plan to to transition away from contract mining in 2023 – with an investment of US$115 million being allocated to implementation of an owner miner waste stripping fleet.
Barrick recently stated: “During the fourth quarter of 2022, we began a transition to an owner miner fleet at Lumwana following a study which concluded that this option could result in a 20% cost reduction within the first five years versus contracted services. Separately, an owner miner strategy positions the operation well for future potential expansions including the Super Pit, which has the potential to extend Lumwana’s life into the 2060s.”
From the processing side, there has been a continuous improvement of processing stability leading to higher throughput and the mine is working to exceed the new base set as it moves into the second half of 2023. Recovery has also stabilised following the higher blend of fresh ore from the pit as mining ramps up. Significant investment has been made over the last few years in the new fleet leading to continuous improvement in availabilities, with the latest batch coming into production in April 2023. A new stripping fleet started arriving in Q2, which will continue throughout the year and is expected to see the stripping increase with the fleet arrivals.
Mining originally began at the Malundwe pit in 2008 by Equinox Minerals (Barrick acquired Equinox in 2011), and the operation ran successfully for some years as a trolley assist mine, with trucks going up ramp to feed a primary gyratory, then the ore utilising a 4.5 km conveyor to the plant. The lower grade Chimiwungo or ‘Chimi’ pit (in fact now three separate South, Main and East pits) some 7 km away was then developed starting with South in 2012 and a new primary gyratory crusher and its own 3.5 km conveyor built to allow the Chimi pit to feed the existing plant. Malundwe and Chimi both operated for some years – Malundwe was higher grade but the initial pit closed due to being mined out leaving only the Chimi operation. Malundwe is now set to be reopened and expanded.
Planned Lubwe starter pits to the north could potentially provide a high-grade, low strip ratio plant feed further enabling the unlocking of the value within the envisaged Chimiwungo Super Pit and the potential 40-60 year mine life. Two other prospects – Kamaranda and Kababisa have potential as additional satellites. The Super Pit PFS began in Q4 2022.
The mine initially operated with a fleet of 31 Hitachi 254 t class EH4500 trucks and five 27 m3 EX5500 shovels – four of them face shovels and one backhoe. Trolley assist was discontinued after mining moved from Malundwe pit. Barrick told IM that the main ramp to Malundwe is equipped with the trolley lines which are still in place however the pantographs were removed from the EH4500 trucks as they are now operating under full diesel power.
The current EH4500 trucks are reaching end of life and a competitive fleet replacement tender was held in 2021 where the Komatsu 290 t class 930E-5 was selected as the main new fleet truck type, with the EH4500s gradually being phased out. There are 15 of there running currently – the final new fleet will be a combination of 930E-5 and Hitachi EH5000 trucks – 30 in total. Four of the EX5500 shovels have been retired and one remains. The mine now operates three Komatsu PC8000 and three PC7000 shovels.
With emissions targets set by Barrick just as other top tier miners, IM asked if there was any plan to look again at running a trolley line: “In line with our commitment to reduce green house gas emissions we are in close discussions with our technology partners and OEMs on how to substitute fossil fuel with renewables. The feasibility of trolley assist is under investigation and consideration to ramp design is part of the expansion PFS that is underway.”
Aside from adding new equipment, Barrick added that its people are its greatest assets and training and upskilling is of cardinal importance. “This process starts with modern simulators we acquired to ensure that we can pick those with the best potential and continuously hone their skills to ensure they get the best out of our new assets. We have also reviewed our maintenance practices in close collaboration with our OEMs and sister operations in NGM to learn from past experiences.”
This article originally appeared on International Mining.
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.
First Quantum Minerals -Production Starts at Africa’s Biggest Nickel Mine
First Quantum Minerals, a global copper company with reserves of nickel, gold, and cobalt, has officially commenced production on their nickel mine situated in the North-western Province of Zambia.
The Canadian mineral firm is one of the world’s top 10 copper producers and has been partly situated in Zambia since 2005, owning various mines in the country, including Kansanshi which produces more copper than any other mine in Africa.
However, it is the Enterprise nickel mine that First Quantum is currently focussing on, the sediment-hosted nickel-sulphide deposit has been estimated to hold 40 million tonnes of ore and contain 431,000 tonnes of nickel.
Yesterday, on July 26, mining output started on the mine and a new concentrator, set to increase the efficiency of mineral processing, is expected to be commissioned early next month by the Minister of Mines and Minerals Development Paul Kabuswe.
The mine is expected to upscale annual production to nearly 30,000 tonnes of nickel over the next two years, according to First Quantum’s project manager Axel Köttgen.
This increase would make Zambia the largest producer of the metals needed to manufacture batteries for electrical vehicles, a prospect which aligns with the government’s intention to become a major trader in the emerging market of EV batteries.
Internationally, critical supplies of battery minerals are being pursued by countries such as China and the US. Nickel, as a central component of most EV batteries, holds a specific importance in this global rush to secure battery metals.
In addition to this recent investment, First Quantum approved a $1.25 billion expansion project for their Kansanshi copper mine in Zambia last year. A decision the company stated was provoked by a “renewed confidence” in Zambia's investment climate due to the work of the current government.
First Quantum’s increased funding for Zambian assets follows a larger trend of investment into the country, with companies regularly publicising developments into the Zambian economy, ultimately evidencing the restored level of trust in the stability of the nation’s economy under President Hakainde Hichilema’s administration.
Great Future Beckons for Lumwana as Barrick Unlocks Potential
Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) – Barrick’s drive to transform the Lumwana copper mine into a Tier One asset with a life extending beyond 2060 is picking up speed with a strong performance in the past quarter adding impetus to its continuing production ramp-up.
Briefing media at a site visit here today, Barrick president and chief executive Mark Bristow said the mine’s full potential was only now being revealed. Additional expansion opportunities, identified through an updated geological model, are currently being assessed, while drilling at the Kababisa prospect highlights potential mining flexibility through higher grades. The Lumwana pre-feasibility study is progressing in line with our plans to transform its long-term copper profile through the delivery of the envisioned super pit.
“Since Barrick refocused its strategy in Africa in 2019, Lumwana has become a key element in the expansion of our strategic copper portfolio and a significant contributor to our bottom line. At the same time its importance to Zambia has grown. Since 2019 it has contributed more than $2.3 billion to the country’s economy in the form of royalties, taxes, salaries and purchases from local suppliers,” he said.
Barrick has a global policy of sourcing its suppliers locally and last year it spent $432 million, 83% of its total procurement, with Zambian suppliers and contractors. It has also launched a “Business Accelerator Program” to build the capacity of Zambian contractors in the mining supply chain.
Similarly, Barrick is committed to local employment. Currently 99.3% of Lumwana’s employees and 98% of its contractors are Zambian nationals, both industry-leading statistics.
Lumwana is a participant in the United Nations’ REDD+ project, which is designed to reduce greenhouse gas emissions from deforestation, and the mine has engaged with its communities on this initiative.
Zambia Debt Restructuring: What You Need To Know
On 22 June, Zambia announced that it had reached an agreement on comprehensive debt treatment according to the G20 Common Framework, just over 30 months after first defaulting on its debt. But what are the terms of the new debt arrangement?
How Much Does Zambia Owe?
Major bilateral creditors, including France and China, have agreed to restructure loans totalling to $6.3 billion.
Among the deals’ clauses was an obligation for “comparability of treatment for Zambia’s commercial debts”, guaranteeing that the $6.8 billion owed to private sector creditors would also be restructured according to the G20 Common Framework.
In total, $13.1 billion will be restructured under the deal.
How Will These Be Paid Off?
Zambia’s debts have been reorganised to be paid over a 20-year period with a three-year grace period. Zambia will only have to pay the interest rate on its loans until 2026, and will have until 2043 to conclude debt repayment, an extension of the previous deadline by 12 years.
Zambia’s rate of interest will be capped at 1% until 2037, and will rise to a maximum of 2.5% for the remainder of the loan. Zambia has been paying an average of 3.9% on its Chinese bilateral loans. Interest rates may rise to a cap of 4% if Zambia is upgraded from a low to medium debt carrying capacity.
Also included in the restructuring is a loan to cover the ongoing construction of the Kafue Gorge Lower hydroelectric powerplant.
What Does This Mean For Zambia
The deal also means that Zambia has fulfilled the requirements for the IMF to disburse its second instalment of $188 million agreed in April, which will be injected directly into the Zambian economy.
When President Hichilema returned to Lusaka’s Kenneth Kaunda International Airport, he said that the deal created the conditions necessary for Zambia to “rebuild confidence in our economy, attract foreign investment, and unlock the potential of our natural resources”.
Analysts expect Zambia’s bondholders to also strike a debt restructuring deal with the government in the coming weeks. This would secure a plan to pay back some $3 billion owed to private lenders. Optimism is particularly high after the bilateral debt deal saw the Zambian government pledge to speed up its repayments as the economy improves.
Zambia state firm says Zijin, Sibanye interested in copper mine
LONDON, June 26 (Reuters) - Zambia's state-owned ZCCM Investment Holdings (ZCCM.LZ) confirmed on Monday that China's Zijin Mining (601899.SS) and Sibanye Stillwater (SSWJ.J) are among investors short-listed to buy Mopani Copper Mines.
The list includes those companies, China's Norinco Group and an investment vehicle owned by ex-Glencore officials, Reuters reported June 20, citing sources.
The search for a new investor for Mopani is likely to be concluded within the next two months, ZCCM-IH CEO Ndoba Vibetti told Reuters at a mining conference in London. The mine would require at least $1 billion in funding over the next five to six years, Vibetti said.
Attracting a new investor at Mopani is part of the government's plan to triple copper output in Africa's second-largest producer over the next decade.
The Mopani mine and smelter complex currently requires around $200 million to $300 million of short-term funding to make it sustainable, Vibetti said, adding that it has taken a long time to find a new investor because they needed a suitable company to takeover Mopani.
"Part of the reason that has taken so long is to get that packaging right," Vibetti said. "Somebody who can come, bring it out of water and then be able to invest for the long term."
Switzerland-based commodities giant Glencore (GLEN.L) sold a 73% stake in Mopani to ZCCM-IH in 2021 for $1.5 billion in a deal funded by debt, but it retained offtake rights to Mopani's copper production until the debt had been repaid in full.
This article originally appeared on Reuters
Debt Restructuring Deal Puts Zambia Back in the Champions League
After months of build-up and years of waiting, Zambia has arranged a historic deal to restructure more than $6 billion in debts owed to foreign creditors.
The deal, which will rearrange the structure of the money lent bilaterally to Zambia by nations including China, marks the first major debt relief assigned to a developing country within the Group of 20 (G20)’s Common Framework. Public sector creditors have agreed to reschedule $6.3 billion of debt, $.1.3 billion of which were accrued arrears.
The news was announced by a French official, and later confirmed by Zambia’s finance ministry, ahead of the Globate Climate Finance conference being held in Paris. The summit’s aims include combatting poverty, fighting climate change and reaching “climate solidarity” between developed and developing nations. The same official disclosed that the Memorandum of Understanding contains a clause “requiring comparability of treatment for Zambia’s commercial debts”, guaranteeing that private sector creditors will follow the G20 Common Framework and restructure the $6.8 billion they are owed, meaning that a total of $13.1 billion in debt is to be repackaged.
Presidents Macron and Hichilema greet each other outside the conference. (Hakainde Hichilema / Facebook)
Details are expected to emerge in the coming days once Zambia has formally accepted the debt relief, but an anonymous member of the Paris Club confirmed that China and India had agreed to terms with traditional creditor nations of the Club. It is further understood that the creditors have unilaterally agreed to extend the repayment deadlines for loans by 20 years, with an initial three-year grace period also among the terms.
The memorandum that will be signed will be historic for a number of reasons. The relief will address the debt Zambia incurred when it became the first African nation to default on COVID pandemic-era national debt; the arrangement is the first significant restructuring agreed within the G20 Common Framework; and the deal is likely to lead the way for other struggling nations, including Ghana, Sri Lanka and Ethiopia, whose talks with major creditors have all recently stalled in similar fashion to those of Zambia in the spring.
Janet Yellen, the U.S. Treasury Secretary, mentioned that debt relief was an urgent priority for Ghana and Sri Lanka upon arriving in Paris on Wednesday, when she hinted at Zambia’s debt deal being “very close”. Yellen has been a central figure in the revitalisation of multinational discussions on Zambian debt resolution, and drew attention to the urgent need for round-table talks during her visit to the nation as part of her January 2023 tour of Africa.
Secretary Yellen with President Hichilema during her tour of Africa in January 2023 (Saul Leob / Getty Images)
The deal has yet to be signed; its announcement, nonetheless, has had an immediate and profound impact. Zambia’s currency has rallied 12% this month, making the kwacha the fastest-growing of the 150 currencies monitored by Bloomberg. The 12% increase is the greatest growth the kwacha has enjoyed in more than 7 years. Zambia’s eurobonds, meanwhile, have returned 10.1%, a figure bested only by El Salvador and Argentina.
In October, Zambia’s treasury secretary, Felix Nkulukusa, said that the country was seeking to restructure 12.8 billion in external debt. Nkulukusa also explained that reducing foreign holdings of domestic debt would release funds for other creditors such as China. It is suspected that a significant portion of this initial $6.3 billion package will be committed to servicing debt holdings.
The Paris Club official also disclosed that the $4.1 billion owed to the national Export-Import Bank of China formed the majority of the $6.3 billion package, which is publicly known to have been funds owed to government bodies. They added that Beijing was wary to be seen holding up debt relief for Zambia at a summit attended by 40 world leaders designed to ease debt burdens for developing nations and free up finances for climate initiatives. President Macron’s meetings with Chinese authorities in Beijing in April are understood to have had a significant impact on yesterday’s final talks.
Presidents Macron and Xi in April. (Eliot Blondet / Sipa USA)
Eswar Prasad, professor of economics at Cornell University, said that China’s “endgame seems to be a resolution that limits its financial losses while spreading more broadly the blame for the distressing and untenable situation that many highly indebted economies find themselves in”. The International Monetary Fund has estimated that 70 of the lowest-income nations are burdened by a collective $326 billion in debt; more than half of those same nations are in, or reaching, debt distress.
Ghana and Ethiopia have been locked in talks with creditors for months, their debts dominated by loans from China. It is hoped a solution to their plight will be agreed by the conference’s conclusion.
The scale of Zambia’s debt had been a cause of concern for major Zambian creditors and potential investors, compounding its repercussions. Financing assurances were provided by Zambia’s biggest creditors in July 2022; reports in January 2023 expected restructuring to take place in March. In May, two months after debt relief was supposed to have been arranged, Zambia’s central bank was forced to raise inflation by 25 basis points to 9.5%. Growth in 2022 reached 4.7%, despite Zambia’s distressed status, but forecasts expected a drop to 3.6% in 2023. The IMF guaranteed a $188 million financing disbursement in April 2023, to be released once debt was restructured; Zambia has been waiting patiently for this immediate boost to their economy ever since.
Finance Minister Musokotwane during July 2022 negotiations. (Zinyange Auntony / Getty Images).
Kristalina Georgieva, managing director of the IMF and another vocal supporter of Zambia, issued a statement on Thursday, which read, “Today we will talk about Zambia, which I think is a great case of celebration because it makes debt restructuring agile and effective”. Visiting Lusaka in January 2023, Georgieva committed to assisting “Zambia on its journey towards a more resilient and inclusive future”. She said that she was “hugely impressed by Zambia’s enormous potential given its rich endowment of natural resources, and a dynamic and entrepreneurial youth population”. She praised Zambia’s “efforts to improve the use of public resources by reallocating resources from poorly targeted and inefficient spending and redirecting them to much-needed spending on education and health”, and asked creditors for “swift resolution of its debt situation to complement these reform efforts and preserve the positive growth momentum”.
In April, Georgieva accompanied a trip of IMF staff to Zambia, and told reporters that “The ball is truly in the court of the creditors”. Georgieva and the IMF’s unrelenting support for Zambia has been critical in adding much-needed optimism to the discussion of Zambia’s debt relief and highlighting the role that China and private creditors could play in Zambia’s return to economic good health.
IMF Managing Director Georgieva in Chongwe, Zambia. (Kim Haughton / IMF)
This morning, Hakainde Hichilema, President of Zambia, spoke before delegates at the New Global Financing Pact at Palais Brongniart, Paris. He thanked Presidents Macron and Xi, along with other major creditors. Hichilema concluded his speech with a familiar refrain: “Zambia is back in the Champions League”.
Four firms shortlisted in race to buy Zambia's Mopani Copper Mines - sources
June 19 (Reuters) - China's Zijin Mining (601899.SS) and Norinco Group, South Africa's Sibanye Stillwater (SSWJ.J) and an investment vehicle owned by ex-Glencore officials have been shortlisted in the race to buy Zambia's Mopani Copper Mines, two sources with knowledge of the matter told Reuters.
Zambia's mines minister Paul Kabuswe said in February there were 10 suitors for the mine and smelter complex that is owned by state firm ZCCM-IH.
Rothschild & Co, hired last year to find investors for Mopani, has whittled down the list to four, the sources said.
Switzerland-based commodities giant Glencore (GLEN.L) sold a 73% stake in Mopani to ZCCM-IH in 2021 for $1.5 billion in a deal funded by debt, but retained offtake rights of Mopani's copper production until the debt had been repaid in full.
One of the sources said the investors, who conducted due diligence and submitted non-binding offers in May, are now completing all the work required before making binding offers, with Sibanye, Zijin and Norinco the three strong contenders.
The source added that an investor is expected to be selected before the end of July, and that separate proposals have also been made to Glencore, which is still owed money.
Glencore also made further loan advances to Mopani in 2022.
Reuters was not able to establish the value of the deal.
A spokesperson for Glencore declined to comment. Zijin also declined to comment, while Norinco and ZCCM-IH did not immediately respond to emailed questions.
Sibanye CEO Neal Froneman, who is seeking to expand in copper as part of the company's push into green metals, confirmed the company had submitted a proposal to acquire Mopani.
"We are willing to invest, we are willing to be there for the long term," Froneman told Reuters in an interview.
Froneman said the copper mine, which could potentially produce about 225,000 tonnes of copper annually, required considerable investment, but that the available deposits made Mopani a good asset to own.
"It's a wonderful orebody, and a good mine starts with a good orebody and good people," Froneman said.
Zambia's President Hakainde Hichilema is seeking to attract new investors in Africa's second-largest copper producer, and wants to triple output of the metal that is key to products from power lines and industrial machinery to electric vehicles.
Zambia’s Creditors Close to Debt Restructuring Deal, IMF Says
Zambia’s creditors are close to agreeing to a long-awaited debt restructuring deal that will allow the International Monetary Fund to disburse $188 million to the distressed African nation.
“We’ve had initial agreements to provide financing assurances so the IMF can proceed with providing financing with Zambia,” Abebe Aemro Selassie, the fund’s director of the African Department, said during a panel at the Bloomberg New Economy Gateway Africa forum in Marrakesh, Morocco, on Tuesday.
Zambia’s official creditors committee met earlier this month to discuss proposals for a “specific debt treatment” after the country’s Finance Minister Situmbeko Musokotwane appealed to creditors for urgent debt relief.
The fund and Zambia are having “very very active discussions and we are very hopeful that something will come through in the next few weeks,” he said.
This article originally appeared on Bloomberg