Zambia's copper production is expected to drop to a 14 year low

On July 20th, foreign media reported that Zambia's copper production will drop by more than 10% this year, to the lowest level in 14 years, which will have a significant impact on the income and economic growth of this southern African country.

The Ministry of Finance and the Ministry of National Planning stated in a report this week that copper production will decrease to 682431 tons. Copper production accounts for over 70% of export revenue. This will be the lowest level since 2009 and mark the third consecutive year of decline in production since reaching its peak in 2020, although gold prices remain high.

The economic downturn will affect economic growth, and the Ministry of Finance predicts that this year's economic growth rate will decrease from 4.7% in 2022 to 2.7%. In the first half of this year, the revenue from mineral usage fees was only 23% of the target. This is also another obstacle to the government's ambition to increase annual production to 3 million tons by 2031.

As copper production declined, Zambia was trying to restructure its foreign debt, becoming the first Sovereign default country in Africa during the pandemic in 2020. Last month, it reached a breakthrough agreement with bilateral creditors led by China and France to modify a $6.3 billion loan.

According to a report released by the International Monetary Fund this month, weather related shocks and declining copper revenue (including insufficient production) are the biggest risks faced by Zambia's economy. The government led by President Hakainde Hichilema has been working hard to find solutions for two large copper mining companies, after his predecessor clashed with the owners of these two companies and took them over.

The International Monetary Fund said that solving the problems of Mopani Copper Mines Plc and Konkola Copper Mines of Vedanta Resources might "significantly increase the production of copper and cobalt", which has been in provisional liquidation for more than four years. Since the government acquired Mopani from Glencore Plc through a state-owned holding company more than two years ago, the company has been struggling.