A Chinese copper firm is to invest $100 million in a mining project in Zambia in order to produce 600 tonnes of copper cathodes a year, further increasing China’s investment in Africa as it seeks raw materials.
The Zambian environmental management agency, which approves all major infrastructure projects in the country, announced that an application had been made to build a plant by China Copper Mines Ltd.
Zambia is Africa’s biggest copper producer, while China consumes almost its entire of production of raw materials, thus making demand from the economic powerhouse significant. Though Zambia is looking to shift from its traditional dependence on copper to hydro-electric and agricultural resources, China’s ongoing investment across Africa makes the deal an attractive one for the country. China Copper Mines will exploit five mineral waste dumps created by mining operations at the high-grade Fitula open pit, 400km north-west of Lusaka.
“Key production processes will include crushing, screening, heap-leaching, solvent extraction and electro-winning of mineral resource,” the agency said in a statement.
Zambia is set to produce 1.5 million tonnes of cooper per year, making it the world’s fifth biggest producer, by 2015 as a result of large investment, according to Zambia Development Agency (ZDA) Multi Facility Economic Zones (MFEZ) manager Robert Banda. Banda said Zambia, currently ranked seventh, had the potential of producing about 1.5 million tonnes of copper each year. Currently copper contributes to around 50 per cent of the country’s GDP, which according to the International Monetary Fund is expected to rise to 7.7 per cent from 6.5 per cent for last year, though the country is looking to diversify its economy.
Foreign direct investment (FDI) in Zambia stands at $1.041billion per year, compared to just $105 million in neighbouring Zimbabwe. FDI has been particularly large in the copper sector, including $3 billion by the First Quantum Minerals, $2 billion by Vedanta, C$7.3 billion ($7.1 billion) by Barrick Gold, another $2 billion by China Nonferous Metal Mining Group and $1 billion by Vale. Banda said that foreign investors should invest in sectors that had sizeable impact on economic growth in the country.
“We would like to urge foreign investors to come and invest in Zambia because the country has a positive and investor friendly economic environment,” he said.
China’s demand for raw materials is large, with the country’s need driving up prices of commodities across the world, especially in Africa. “How many people in the world were able to forecast the massive commodities boom in China?” said Peter Coates, chief executive of Xstrata Coal in Newcastle, Australia. “Suddenly, around the world, stockpiles of everything from copper to coal disappeared.”
“China’s got too much of an engine going to stop,” said Rex Littlewood, general manager for Asia Pacific for Noble Australia, an arm of the Hong Kong-based shipping and commodities giant Noble Group. “When you’ve got 1.3 billion people, they require a lot of electricity, especially once they’ve got a light bulb and an air conditioner, a toaster and a rice cooker.”