Reversal Of Fortunes: Glencore Plans To Invest $1.1B In Zambia
The kwacha rose to its highest level in two months Wednesday after Switzerland-based Glencore announced plans to invest over $1.1 billion in Zambia, and sink three copper mine shafts with new technology that will extend mine life by over 25 years, Reuters reported.
Glencore has invested over $3 billion upgrading infrastructure in Mopani, and in major capital expansion programs since 2000, Mopani said in a statement.
Mopani produces and sells copper and cobalt for markets worldwide, helping make Zambia Africa’s No. 2 copper producer.
Mopani Copper Mines is owned by Carlisa Investments, a joint venture company consisting of Glencore International (73.1 percent), First Quantum Minerals (16.9 percent) and ZCCM-IH (10 percent).
In February 2016, Zambia power rates for mining companies by 26 percent in an effort to persuade companies to invest in power generation, according to MiningTechnology.
Glencore plans to make an investment of more than $1.1 billion in Zambia between 2016 and 2018. The investment is expected to transform Mopani Copper Mines into a new mining operation by 2023.
“We firmly believe that we shall be able to overcome the challenges that we face today as a company and become profitable and operationally efficient,” Mopani Copper Mines said in a statement.
When Glencore announced in September that it was stopping production at two of its African copper mines in Mopani for 18 months, 400,000 tonnes of copper fell off the market and the price of copper rose, FinancialTimes reported in September. Rival copper miners were happy.
Copper production accounts for more than two thirds of Zambia’s export revenues and a fifth of tax revenues.
After Glencore’s announcement, Zambia’s Ministry of Finance reduced its 2015 real GDP growth forecast from 7.2 percent to to 5 percent.
Zambia in 2014 relied on Glencore’s operations for more than a quarter of its total copper output, according to according to rating agency Moody’s.
The latest investment aims to develop Mopani Copper Mines’ three copper mine shafts, including Synclinorium, Mindola and Mufulira, to extend their mine life by more than 25 years, MiningTechnology reported.
Weaker prices and an electricity shortage have put pressure on Zmbia’s mining industry, threatening production, jobs and economic growth, according to TheAfricaReport.