The mining industry remains the economic and social backbone of Zambia. Copper and cobalt are the key commodities produced in Zambia, with the Zambian copper belt remaining the focus of mining and development activities. The copper belt, which is situated between Zambia and the Democratic Republic of Congo, is one of the world's greatest metallogenic provinces. The area contains the world's highest grade copper and cobalt deposits, with tailings dumps often containing grades greater than that of most hard rock mines. Zambia's mining sector is set to continue the recovery seen over the last decade. The country had declining copper output throughout the 1990s but a mixture of low taxes, privatization and elevated copper prices has seen a substantial boost to investment and output.
Whilst much of the attention during the latest round of financial results has been devoted to record profits for the major miners, there has been a more concerning pattern of rising costs, an issue expected to remain important in the coming months. Mining companies have seen declining margins as elevated energy prices and higher wages have taken their toll. Energy prices are expected to remain elevated, with oil prices averaging US$102/bbl in 2012 and skills shortages are likely to push wage costs even higher over the coming months.
First Quantum and Vedanta Resources are few of the biggest players in the Zambian mining industry. Over the longer term, African Rainbow Minerals and Vale have announced the construction of the Konkola North copper mine with full production of 45ktpa due to commence by 2015. Zambia is an attractive place for mining companies as the government has ruled out the reintroduction of a mining tax, which looks set to be implemented in other countries including Chile and Australia. In addition, Zambia possesses some of the highest grade copper ore deposits in the world, at a time when some of major mines are experiencing falling grades.
On the back of the creation of two multi-facility economic zones, high commodity prices and a relatively light tax and regulatory scheme, foreign investment into Zambia has surged. To encourage mining activity to continue amidst lower global copper prices, the government abandoned the new taxes on the sector in January 2009 after only nine months. In general, Zambia is working to overcome the most prominent impediments to foreign businesses by investing heavily in physical infrastructure and combating endemic corruption. However, progress is slow and the country faces other longer-term challenges, which includes poor worker health and education as well as a relatively weak legal system.
In this industry scenario, Taiyou Research analyzes the Mining Industry in Zambia. The report covers the following:
- An industry definition.
- A brief analysis of the global mining industry.
- A brief analysis of the African mining industry. We look at the mining industries in Botswana, Mozambique, South Africa, Zambia, and Zimbabwe.
- An analysis of the mining industry in Zambia.
- Analysis of the regulatory framework governing the mining industry in Zambia. We also look at the legal framework in the country, along with the challenge of corruption.
- An analysis of the various commodity markets in Zambia. Markets analyzed include the market for cobalt, coal and copper. For each commodity, we analyze production statistics, new projects, existing projects, major producers, and the industry profile.
- Competition in the industry is analyzed through competitive landscape.
- Major players are analyzed through a company overview, analysis of the major business segments, and a SWOT analysis.
An industry forecast completes this comprehensive coverage of the Mining Industry in Zambia from Taiyou Research.