- Copper increased the 2021 trade surplus to 73.4 billion kwacha (US$4.4 billion) as of November 2021, a 76 per cent increase over the previous year.
- The country intends to move from one million metric tonnes production to three million metric tonnes every year for the next decade.
- Copper prices stood at US$9,324.71 per metric tonne as at November 2021.
Zambia’s currency, the Kwacha, has recorded its highest value since 2005. It had gained 27 per cent against the US dollar by the end of 2021.
Its success has been linked to the optimistic and entrepreneurial approach of President Hakainde Hichilema’s government, which was elected to office in August this year.
Investors are banking on the possibility of the new government securing a bailout agreement with the International Monetary Fund on debt restructuring negotiations.
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This year has seen the currency’s best annual performance since 2005, ranking second after the Seychelles rupee. A dollar is trading at 16.67 Kwacha and 13.35 Seychelles rupees as of December 31. Both countries were among the three worst performers in 2020.
President Hichilema’s government is in the process of reworking as much as $17 billion in external public debt. He has submitted an endorsement request to the IMF as his administration advances talks with creditors from US$3 billion in Eurobond holders to US$5.8 billion owed to the Republic of China.
“We plan to conclude the negotiations by the middle of 2022,” says the Finance and National Planning Minister, Situmbeko Musokotwane.
Last year, Zambia became the first sovereign defaulter on the continent during the Covid-19 era and has not serviced most of its dollar debt since.
The Kwacha has been kept afloat by increased prices for metals and agricultural exports (maize wheat and soya beans). The mining sector might sustain the advancement of the Zambian Kwacha against the dollar. Copper accounts for more than 70 per cent of the country’s exports. The metal had increased the 2021 trade surplus to 73.4 billion kwacha (US$4.4 billion) as of November 2021, a 76 per cent increase over the previous year.
Zambia is Africa’s second-largest producer of copper, after the Democratic Republic of Congo (DRC). It is the third most widely used metal in the world.
Experts say that investment in the country’s mining sector has the explosive potential to accelerate the growth of the economy of the state and value the Zambian Kwacha.
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In the 2022 national budget presentation on October 29, 2021, the finance minister said the country intends to move from one million metric tonnes production to three million metric tonnes every year for the next decade. Copper prices stood at US$9,324.71 per metric tonne as of November 2021.
Industry experts estimate an additional demand of seven million metric tonnes of copper by 2030.
President of the Zambia Chamber of Mines, Dr. Godwin Beene, made an announcement that mineral royalty taxes will become a deductible expense, which serves as a green light that Zambia is once again ready to welcome local and foreign investors in the mining sector.
“Copper will be as lucrative as oil was in the mid-1970s,” Dr. Beene said.
Copper has remained the pinnacle of the country’s economic development. According to Mining.com, Zambia produced 882,061 metric tonnes of copper in 2020, compared to 796,430 tonnes produced in 2019.
Dr. Musokotwane has rationalised the mining tax regime to attract investment and boost production in the country. This is aimed at balancing the state’s benefits from having the resource with rewarding mining investors.
Mines Minister, Paul Kabuswe, announced that the Mopani copper mine was poised to record a US$52 million profit at the end of the 2021 financial year.
Charles Sakanya, CEO at Mopani Copper Mine, said that the future for copper mining at the site was still bright as there were still ore reserves accounting for 129 million tonnes in Nkana and 23 million tonnes in Mufulira.
Sakanya disclosed that the company will pay royalty amounting to US$41 million at the end of the year.
Zambia’s extensive mining sector boasted gold production of 3579 kg, 5712 tonnes of nickel, 28,409 tonnes of manganese and 287 metric tonnes of cobalt.
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