DON’T SELL MINES – SINKAMBA

…AS EXPERTS PROJECT THAT COPPER’s eventual bull run is likely to make oil’s famous 2008 rally look like child’s play 

BY NATION REPORTER

GOVERNMENT has been advised to shelf the decision of selling Mopani Coper Mine (MCM) to new mining investors in view of the prospects of the copper prices soaring in the next two to three years.

Peter Sinkamba, the president of the Green Party says government should not give away Mopani mine but should instead consider capitalizing the asset as it had the potential to generate revenue which the country is currently begging from the International Monetary Fund (IMF) and the World Bank in form of loans.

And global mining experts are projecting that Copper’s bull run was likely to make oil’s famous 2008 rally look like child’s play, because the metal has become critical in the manufacturing of electric motor vehicle batteries.

“For us here at Citi, copper is the energy transition bull trade. The world is cyclically weak right now, and that means the trade is on pause. But copper’s eventual bull run is likely to make oil’s famous 2008 rally look like child’s play,” Max Layton, Citi’s managing director for commodities research, said. 

Copper’s critical role in electric vehicle batteries and other green energy technologies has led some to call it “the new oil.” The metal is used in solar panels, wind turbines, electrical cables, and even your iPhone. In fact, copper is so widely used in construction, manufacturing, and electronics production that it’s often seen as a proxy for global economic activity and a business cycle indicator, earning it the nickname “Dr. Copper.” 

Lately, with the global economy struggling to regain its stride after Covid, the doctor has been sounding the alarm (copper prices are falling), but if you ask Citi, it’s just a minor setback for the energy transition king.

Mr Sinkamba has however said the sale of the Konkola Copper Mine was unavoidable because of its legal encumbrances with Vedanta Resources, who are prospecting to get back the mine after an acrimonious exit a few years ago.   

Mr Sinkamba explained that copper prices were often cyclic and that in the coming two to three years, the prices of copper were expected to increase to an average of US$11, 000 per tonne from the current US$8, 000 and that Zambia would earn more if it kept and ran the giant mine.

“The copper prices are often cyclic. During the time of high prices, it is important that we maximise the profits and when the prices hit the low, we have to manage our resources the best we can. For this reason, there is indeed need that we should not give away such assets. For Mopani, we do not have to give it away at the moment because it requires capitalisation which we can afford as a country. The capitalisation of Mopani Mine is between US$300, 000 million and US$500, 000 million which we can mobilise even through the Constituency Development Fund, Mr Sinkamba said.  

He however said the challenge with KCM was the legal imbroglio the mine was in with Vedanta Resources which would be unable to mobilise resources to recapitalise the mine following its revised credit outlook to negative from stable by S&P Global Ratings.

According to S&P Global Ratings, Vedanta Resources’ weakened access to cash flow from its operating subsidiaries at a time of challenging external financing conditions had raised its refinancing risk. The company has about US$3 billion of debt and funding gap of US$2 billion till August 2024.

Mr Sinkamba said there had been a significant reduction in creditworthiness of Vedanta Resources and the government should work around finding an equity partner that would buy off the mine from the Anil Agarwal owned company.

“With KCM, we have a complication because there is already a legal owner of the mine. The challenge however is that Vedanta Resources is unlikely to pull resources and recapitlise the mine because of its current status of poor credit worthiness following its rating to negative from stable by S&P Global Ratings,” Mr Sinkamba said.

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