Business Enquirer Issue 108 | Mopani Copper Mines | Nov'22

Mopani Copper Mines PLC

Coppered- Colored Dawn

Mopani Copper Mines Plc’s new lease on life affords a renewed opportunity to meet future demand for copper, cobalt, and foreign investment in the mining industry.

Needless to say, it is a major player in the sector and a lifeblood of the economy.

Zambia

is Africa’s second-largest copper producer and has a long history of mining with spells of both privatization and nationalization, with a genesis that dates back to the 1920s.

According to the Zambia Extractive Industries Transparency Initiative 2020 report, mining is Zambia’s dominant industry, accounting for approximately 11% of the country’s gross domestic product, over 75% of exports, 31% of government revenue, and 2% of national employment.

This African nation is home to some of the world’s largest copper deposits and several copper production giants such as Mopani Copper Mines Plc, the country’s second-largest copper mine and among the largest employers outside the government, with over 15 000 jobs.

Mopani Copper Mines Plc is located in the town of Kitwe in the Copperbelt Province of Zambia and produces around 100 000 tonnes of copper per year, with plans underway to increase this to 225 000 tonnes in the next five years. Leadership has made some necessary strategic changes in order to actualize this goal.

Mopani is considered one of the most advanced underground mines with over 129 million tonnes of copper reserves. The organization was voted the mining company of the year a record five times by member organizations under the Kitwe district and the Chamber of Commerce and Industry, due to its $1.5 billion investment in ultramodern infrastructure to extend the lifespan of the mine beyond 25 years.

The company has been in operation since 2000 and began its life as a joint venture between Glencore International AG, First Quantum Minerals Ltd, and Zambian state-owned mining company ZCCM Investments Holdings Plc.

PROJECT DIRECTED BY WRITTEN BY Malvern Kandemwa Frew Murdoch

Mopani Copper Mines PLC

Recently, ZCCM acquired 90% shares in the mine from Glencore and First Quantum Minerals, taking complete ownership of Mopani in a bid to effect an immediate turnaround. This came after Glencore tried to suspend operations at Mopani due to low copper prices and COVID-19 disruptions.

In a digital asset released by the mining company, Mopani Chief Executive Officer Charles Sakanya said:

“...Once we learned we were granted a lease of life to continue to operate, we embarked on a cost reduction drive. We’ve controlled our purchases very strictly. We got rid of expensive labor and then we increased production. We produced as much as we could under the circumstances.

“We dropped the production cost from 6.85 cents per pound down to 4.35 and still going. We would like to be around the 3.50 mark.

“The potential for Mopani is huge. We are now talking of mining at two kilometers deep at Ndola mine, we’re at 1.5 kilometers at Mufulira with an extension over the shaft of two kilometers as well. At these levels, we still have copper. So, copper is here for a long time.”

‘New Dawn’ mining policy for Zambia

This year, Zambia’s mining sector and economy have been given hope in the form of a new mining policy. In a keynote speech entitled “A New Dawn for Zambia’s Mining Sector” presented at the Investing in African Mining Indaba in Cape Town, President Hakainde Hichilema set out the government’s vision for a robust and sustainable mining industry.

Key takeaways from his speech included plans to establish a sovereign wealth fund to safeguard future generations’ ability to benefit from the country’s natural resources and intentions to improve infrastructure and power supply to better attract investors into the mining sector.

In addition, the government aims to create

more jobs and improve their citizens’ social welfare. These initiatives and steps are being rolled out in a bid to achieve the government’s ambitious objective of taking annual copper production levels to three million tonnes in the next decade.

Mopani believes the mining policies being put in place by the Government will ensure that the three million tonnes of copper per annum is achieved through sustainable growth.

“ZCCM-IH is committed to seeing that MCM [Mopani] delivers to its optimal production levels in order to contribute to the national production target of 3 million metric tonnes of copper by 2030,” said ZCCM in a statement. In alignment with this, the state-owned company has recruited investment bank Rothschild & Co for a strategic review of

Mopani Copper Mines PLC

Mopani “to ensure its sustainability and continued development”.

Recently, the mining organization has invested in three new shafts: Synclinorium, Mindolo Deeps, and Mufulira Deeps. At its projected depth of 2km, Mufulira will be the world’s second deepest, single-shaft underground copper mine, just 100 meters short of the 2.1km-deep Resolution Copper Mine in Arizona, USA.

Zambia as an investment destination

Zambia is a stable democracy with a probusiness environment and a growing economy. The country has recently been upgraded to ‘investment grade’ status by international credit rating agencies and is seen as an increasingly attractive destination for foreign direct investment.

The country has a steady political environment and offers a number of advantages to investors. Zambia offers a low cost of doing business and a number of favorable fiscal and non-fiscal investment incentives. In addition, the local workforce is extremely skilled thanks to a rich shared experience in copper mining.

The country also boasts a wealth of natural resources besides copper. While it is true that historically Zambia is associated with the warm allure of its rust-toned copper, the country’s offerings have evolved as a result of its economic policies and diversified into other precious metals and minerals.

Mopani for example also yields 700 kilograms of silver, approximately 114 kilograms of gold, and when running at full capacity, 1 800 tonnes of sulfuric acid, which is used in the treatment of oxide ores and in fertilizer plants. The mining organization also produces 4 000 tonnes of cobalt concentrates.

It is important to note that approximately 90% of current cobalt production comes as a by-product of large-scale nickel and copper

mining operations. Cobalt is a key commodity in this green energy era, with over 50% of the mineral’s global production serving as raw materials for rechargeable batteries.

Curiously, Zambia’s cobalt reserves remain for the most part unexplored and unexploited, mainly due to past investor uncertainty. As the demand for electric vehicles increases, so too does the demand for lithium-ion and cobalt, so it is likely that investors will come around.

Mopani has been hit by a number of challenges in recent years, including low copper prices, power shortages, and labor unrest. However, with the green energy transition fueling copper demand and the mine’s investments and expansion projects, Mopani is positioned effectively to ride the tide and swell with foreign investment.

www.zccm-ih.com.zm/investments/ mining-assets/mopani-copper-mines-plc

Mopani Copper Mines

www.zccm-ih.com.zm

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