|Zambia's copper output under threat from emerging producers.pix: si.wsj.net|
Aug. 24 (Zambia Informer)--------Zambia, once rated Africa’s second top producer has slid one step backwards among the top rated countries as operations at some mining companies slumped on account of policy related concerns.
The declining of copper production of roughly 92,000 tons was relative to 2014 at Lumwana Mine, a unit of Toronto listed Barrick Gold because of higher royalties in Africa’s second copper producer, forced the country to slide to ninth position last year, a report says.
The failure by ‘Greenfield’ Lumwana mine in north western Zambia to live to expectation and remain in full operations saw Zambia produce low than anticipated 600,000 tons of the red metal last year, giving away its eighth position to Canada which mined 695, 000 metric tons, a report compiled as at 31 July this year says.
A report by global metal monitor, investingnews.com/daily/resource, says Zambia’s copper reputation was under test last year after it continued to slide towards the lowest ebb, from four attained in the early 1970s to ninth on the top 10 copper producing countries.
Zambia has been rated among the top four globally, since the early 1970s, despite the country having been mining a paltry 270,000 metric tons of the red metal, where it remained until recent years when it waned. Zambia’s copper mining recorded spurns decades since the early 1930s.
Zambia’s revision of mineral royalties of between six to nine percent for open pit mining and a maximum of 30 percent for underground mining for all mining operations in the copper rich southern African state raised eyebrows among producers, many that feared for their security of tenure on their investments, ultimately dragging their production which affected targets for 2014.
However, the revision of the mineral royalties, which forced many foreign mining companies to revisit their investment plans, prompted the Zambia’s Government to reconsider the policy which was by April reviewed and the decision was rescinded in accordance with the desires of the stakeholders in the sector, Zambia’s lifeblood.
Accordingly, while copper prices have been on the downward trend for some time, losing roughly 26 percent in 2015 with the red metal having gained back some ground since the start of 2016, but is still sitting well below the $3-per-pound mark, largely due to a decrease in demand growth from top consumer China, Chile has remained top with 6 million tons of production.
With world copper supply having not dropped as much as one might expect, according to a research by US Geological Survey (USGS) and global copper production inching up 200,000 tons for a total of 18.7 million tons in 2015, despite reports of production cuts from major miners, Chile remained top and mined at 5.7 million tons as of last year.
Chile’s buoyancy was against the earthquakes, heavy rains and strikes in 2015 on its mine sector, although the outturn dropped by a paltry 50 tons, relative to 2014. Still, the report adds, mine production came in well below initial estimates for the year. Chile was initially expected to produce about 6 million tonnes in 2015, according to the report seen by Zambia Informer.
China, the traditional world’s consumer, emerged second with 1.75 million metric tons,
coming in with only a slight decrease in production relative to 2014. Late in 2015, nine of the country’s largest copper smelters announced that they would cut production by more than 200,000 tons this year in an effort to support copper prices.
Others were Peru on third position with 1.6 million metric tons falling short of its goal of overtaking China to become the world’s second-largest copper producer. However, it did see a drastic increase in production, jumping from 1.38 million tons in 2014 to 1.6 million tons last year.
It is however projected that with a number of major projects set to come online in 2016, Peru’s copper production is expected to increase by 66 percent this year; reports in Peru are cited as saying.
The United States was rated fourth at 1.25 million metric tons, recording a drop of about eight percent last year, chiefly on account of decreases in production in Utah and Arizona. Rio Tinto’s Bingham Canyon mine in Utah saw production fall by roughly 100,000 tons due to lower mill throughput.
Congo (Kinshasa), Zambia’s competitor in copper production and continent’s top rated emerged fifth at 990 metric tons, recording a decrease from 1.03 million tons in 2014 to 990,000 tons in 2015, Reuters is cited as saying in its report.
This is the first time in six years; reports add that the country has seen a drop in copper production on account of Glencore, one of the country’s key producers of the red metal, partially suspending production at its Katanga mining operations in Congo in September.
Australia was sixth with 960,000 metric tons of the red metal with output remaining fairly flat in 2015. Its copper output dropped just 10,000 tons from 2014, even with troubles at BHP Billiton’s massive Olympic Dam operations early on in the year.
Russia was seventh with 740,000 metric tons with production relatively remaining unchanged for 2015, coming in at 740,000 tons compared to 742,000 tons in 2014. Russia’s Norilsk Nickel, is one the major producers in the country, accounting for a large portion of that.
The company reported consolidated copper production of 369,000 tons for 2015. Canada was eighth with 695, 000 tons, with copper production remaining flat in 2015, sitting around 695,000 tons relative to 696,000 tons for the year previous.
Although the strong US dollar may be putting pressure on copper prices, the exchange rate can be a boon for Canadian producers who record costs in Canadian dollars, but sell in US dollars, analysts say.
Mexico was the tail-ender with output of 550,000 metric tons produced last year, up from
515,000 tons turned out in 2014.
However, despite the last on the line, Canada is also home to Grupo Mexico which owns 85 percent stake of Southern Copper, one of the largest copper-producing companies in the world.