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The Copper Rush

Published 8 years ago
By Forbes Africa

Solwezi was once a tiny village in northern Zambia, 16 kilometers from the border of the Democratic Republic of Congo, 581 kilometers from Lusaka, and a million miles from the rest of the world. A few hundred people lived off maize for more than 2,000 years. A walk to the nearest village was days away through thick bush. Now, thanks to copper, Solwezi has become one of Africa’s fastest growing towns in a few short years.

“What started as little more than a village, now has a population of half a million,” says Andrew Hickman, the Local Development Officer for the Kansanshi mine, the largest copper mine in Solwezi.

The two mines near Solwezi, Kansanshi and the Equinox Minerals-owned Lumwana mine, now produce almost 40% of Zambia’s copper; between them they are giving a free market makeover to what was once a tiny village.

Solwezi and copper date back further than the New Testament. Archaeological digs around Solwezi found people traded copper crosses 2,000 years ago. Arabs used the crosses as currency.

Solwezi got back into the business of copper mining in 2005. After years of trial and error Kansanshi, originally a nationalized underground mine, was abandoned when a fissure flooded the shafts. Run by Canada’s First Quantum Minerals, it has expanded since its reopening. It began producing 110,000 tons of copper in 2011 and in 2013 produced 270,724 tons. A new expansion project aims to increase copper capacity to around 400,000 tons by 2015.

Solwezi is not the only mining town to bloom in Zambia. According to the World Bank, Zambia has the largest known reserves of copper in Africa, 6% of the world resource. The country has been exporting copper since the 1920s, but it’s been a rollercoaster ride made more difficult with nationalization, cheap Russian copper and poor economic development.

“Copper production in the country peaked in the 1970s at 700,000 tons and gradually declined to 255,000 tons by 1998, as a result of depressed prices and under-investment in the then state-owned industry. However, as copper production soars on the back of the completion of major projects and also because of the development of the new Trident mine, operated by Canada-based mining company First Quantum Minerals (FQM), Zambia is set to be at the peak of copper production once again,” says Jason Kazilimani Jr, a senior partner at KPMG in Zambia.

Demand for copper is high and expected to grow. The power stations of China alone buy 45% of the world’s copper, says Kazilimani.

It means people and businesses have flocked to Solwezi as if it were the days of the 1849 California Gold Rush. Trucks, buses and taxis veer around potholes in gridlocked traffic. Along the town’s only tar road rises smoke from hundreds of wood fires. The shouts from informal traders, selling anything from cooking pots to roasted nuts, ring the dusty streets. The city is growing; one shack is thrown up after another.

“There is this expectation that we can create full employment for all of them, but it’s impossible. We can only employ 13,000 and these jobs are for semi-skilled and skilled laborers. Our biggest problem is convincing the growing community that we can’t provide jobs for them,” says Hickman.

“On the one hand you have local resentment towards the mine and the idea that foreigners are making millions. On the other you have this huge impact on the community with the social evils like crime, alcohol abuse and gender based violence,” says Bruce Lewis, the head of Kansanshi Corporate Social Responsibility.

Of the 90% of the mining company’s expenditure, 5% is spent in Solwezi. But the town has not been left to fend for itself, claims Mathias Mutupa, the president of the North Western Province Chamber of Commerce and Industry, who is also an entrepreneur.  Kansanshi runs a number of programs with the local chamber of commerce, some include lessons in how to apply for tenders, says Mutupa. He believes the speed at which Solwezi is growing is vital and local business needs to take advantage of it.

“When we started we were giving tenders to locals to kill weeds in our pipeline at KWA 50,000 ($8,000) – small jobs. Now those companies are winning larger tenders to build houses.”

Solwezi should have cheap costs compared to importing them from the copper belt or internationally. In the last four years, the local tenders awarded have quadrupled. In 2011, we were able to give $22 million worth in tenders to local businesses. We are now seeing $105 million going back towards the local community,” says Hickman.

Production of copper may be strong, but the infrastructure isn’t. It’s the story of good and bad news. The good is that by the end of the year Kansanshi will have completed a smelter which will refine 300,000 tons of treated copper concentrate per year – a very lucrative and welcome development at a time when African leaders want more self-manufacturing capabilities. The bad news; the highway needed to transport the copper has not been built due to land rights disputes with local authorities. It means, for now, hundreds of trucks will clog the streets of Solwezi on their way to the smelter.

This lack of infrastructure does not hamper Solwezi alone, explains Kazilimani.

“The problem is so serious that, according to an Africa Infrastructure Country Diagnostic 2011 report on Zambia, investment of at least $16 billion over the next decade is required just to catch up with the rest of the developing world,” says Kazilimani.

Despite this, Zambia has won back its claim to be the copper powerhouse of Africa. There is even talk in Solwezi that another copper belt could be hidden under the soil of Zambia. There is no doubt that the mining companies will find it, eventually.

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Related Topics: #Copper, #Democratic Republic of Congo, #June 2014, #Zambia.