China slowdown hits copper hard

Zambia

Africa’s second-biggest copper producer, Zambia, has just announced an increase in mining royalties from 6% from 8%. For producers, an increase in energy prices by 29% this year has added to costs.

In terms of the general economy, despite a growth rate of 6.4%, inflation has pushed interest rates to 12% and a high budget deficit has led to the country having to approach the IMF for assistance. The government is set to raise revenue by selling a 27% stake in ZCCM Investments (an 87% state-owned company that holds minority stakes in the country’s mines).

*News flash – A single buyer – said to be Red Kite – is currently holding between 50-80% of all the copper (or 140,000 tonnes) in London Metal Exchange warehouses.

Democratic Republic of Congo

In the continent’s leading copper producer, the Democratic Republic of Congo (DRC), Ivanhoe mines has announced that the continent’s largest copper deposit, Kamoa, has a high concentrate grade of 39%, very low arsenic and reserves of 43.5bn pounds of copper.

Recently, Rio Tinto announced it had declined to enter into merger talks with Glencore. Speculation abounds that Glencore will not take no for an answer and will re-approach.

Copper output in the DRC is set to fall a little short of the 1m tonnes set, peaking at around 950,000 tonnes. By contrast, the number-two country, Zambia, is at about 790,000 tonnes. Ensuring sufficient power supplies is a major challenge. Currently, much of the 900MW DRC requires comes from Zambia.

Recently, Rio Tinto announced it had declined to enter into merger talks with Glencore. Speculation abounds that Glencore will not take no for an answer and will re-approach.

Others suggest Rio may make a bid for Freeport McMoRan, which mines the vast Tenke Fungurume copper deposit in the DRC (the world’s largest untapped copper deposit).

Namibia

Namibia is said to be seeking private investors to construct an 800km railway to connect Zambia and the DRC’s copper mines to the port at Walvis Bay.

First Quantum’s Kananshi mine in Zambia is being hampered by the lack of smelter capacity, the company reports. A new smelter is due to come online next year.

Namibia is looking to expand its mineral exports beyond diamonds, with Rio Tinto looking for copper deposits in the north of the country. Elsewhere, Copper Resources Corp of South Africa is exploring the Haib project and Canada’s Helio Resource Corp and Teck Cominco are also reported to be working the Honib and Leicsester propects respectively.