There is greater potential for the mining sector in Zambia

 ZCCM-Investment Holdings (ZCCM-IH) Chief Executive Officer, Pius Kasolo says the company has embarked on diversifying its investment portfolio by actively pursuing investment opportunities in sectors such as manufacturing, power generation, agriculture, and real estate.

And KPMG Chief Executive Officer Jason Kazilimani says there is greater potential for Zambia’s mining sector if production costs are reduced. Mr. Kazilimani said this when he presented a Critical Evaluation of the Status of the Mining sector in Zambia at the Zambia Mining Investment Conference in London on Monday. He observed that that the cost of producing copper in Zambia is much higher than other African Countries.

He said by restructuring the cost structure of Zambian mines, the lifespan of existing mines can be extended and spur investment in the sector adding that greater efficiency and resulting profits will make Zambia a more attractive investment destination.

“The cost of producing copper in Zambia is much higher than other African Countries. There is greater potential for the mining sector in Zambia if the costs are reduced. There are five factors in Zambia that make copper mining costly, fuel, labour, power, services and distance to port. Zambian’s main challenge in the field of copper mining goes beyond the prevailing copper prices. The current copper prices merely expose a series of lapses in our mining operations that add to the costs of mining in Zambia. The challenge before us is how to go back and fix the underlying issues ” he said.

He also said stakeholders need to invest in a unit cost study with a view to making greater use of rail road freight, and local stakeholders need to partner with mines to investigate ways to integrate local businesses into supply chain as a means to reduce costs. For example the demand by suppliers for super profits and the use of expatriate labour at the expense locally qualified Zambians all add to the cost of production.

Mr. Kazilimani said the government needs to provide tax and other incentives to mine suppliers that are able to deliver critical services at lower costs and that government should could also consider tax incentives for mines that support local businesses adding that the Zambian government needs to provide a revised set of quality standards for local SMEs involved in the mining industry.

He said Zambia’s mining stakeholders need to work with the government to ensure that fuel is delivered to mines at the lowest possible costs and mining stakeholders need to undertake feasibility studies into reducing fuel costs by investing in pipelines and fuel depots to secure suppliers at reduce costs.

“Zambia currently generates 99 percent of its electricity through hydro power stations. This reliance, makes the power supply erratic during periods of low rainfall. The government needs to encourage the use of thermal, solar and other alternative power sources as well as encourage industries to build their own power infrastructure, e.g. Dangote Cement who have secured their energy needs by installing they own power station,” he said.

He further said the Zambian public needs to be reoriented to perceive mines as economic resources rather than milking cows by addressing the notion that companies must pay more for everything.

Mr. Kazilimani further said Zambian mines should consider using expatriate staff more effectively as trainers and champions of best practices rather than long staffing solutions saying that mines should look into the Zambian diaspora for specialist skills currently being recruited.

“There is need to curtail the theft of copper cathode and materials from stores and create transparent pathways for genuine, competitive suppliers to get involved in the supply process. While the Zambian government has made tremendous progress to address corruption more needs to be done about private sector corruption because failure to address corruption and theft will deter progress in Zambia as this raises production cost factors leading to a perception that some mines were making losses and therefore, unable to contribute a fair share of tax, thus ultimately denying the country the much needed revenue,” he said.

And Dr. Kasolo said the diversification programme has advanced and that ZCCM-IH is working on setting up Zambia’s biggest cement manufacturing company. He said the cement company will be producing 5, 000 tonnes of cement per day and the company will be stablished at Ndola Lime Company Limited.

The plant will be self-sufficient in electricity as it will have a 52 megawatt power plant constructed alongside the main project adding that the cement company will utilise 22 megawatts (MW) of the electricity generated while the excess will be sold.

Dr. Kasolo added that the new cement plant will help bring down the price of cement and also create jobs for people on the Copperbelt and Zambia at large.

He also said ZCCM- IH with its partners has invested close to US$850 million into a thermal power generation through Mamba Collieries Limited, the thermal power plant which will produce 300MW of power by mid-2016 and 600MW once completed.

ZCCM- IH currently has shareholding portfolio in 16 companies, including the biggest mines such as Kansanshi mining plc, Mopani copper mines and Konkola copper mines and holds 35 percent in Maamba Collieries Limited.

ZCCM IH has about, 2000Hetares of land in Lufwanyama with a water frontage on the Copperbelt Province, which has great potential for farming high yielding crops such as soya beans, oilseed and maize or livestock and fisheries and is available for investment.

The Zambia Mining and Investment conference was gold sponsored by ZCCM-IH in partnership with other silver, star and bronze sponsors from the private sector. The conference aimed to look at what Zambia is and can do to become a leading mining investment destination, and discussed strategies for both the Government and mining investors to achieve best mutual outcomes. The panel was diverse and balanced with Honorable Christopher Yaluma the Minister of Mines and Mineral Development representing government. There was representation from Zambian mining companies, global financing and capital venture companies, insurance and private sector investment representatives including oil and gas exploration companies. The conference is an important avenue to not only dialogue with mining companies but also inform global investors of the status of the country’s investment and policy outlook in the mining space considering that mining remains Zambia’s major economic activity.

LONDON, Wednesday, 22 March, 2016 

 

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