Zambian power providers will reduce supplies to mines in Africa’s second-biggest copper producer by 30 percent as the country faces its gravest electricity shortage.
Suppliers reached the agreement with mining companies, including the local units of Glencore Plc and First Quantum Minerals Ltd., at a Tuesday meeting in Lusaka, the capital, said Jackson Sikamo, president of the Chamber of Mines. Copper producers will have the option of buying emergency imported power at a higher cost, he said by phone.
“It’s important to understand that first of all there is no power,” he said. “This meeting that we’ve had is a step in the right direction in terms of finding a solution to this problem.”
Most mining companies in Zambia are already making losses as copper prices linger near six-year lows, Sikamo said. That could make having to pay more for the emergency power supplies unaffordable. It’s too early to say what the production impact of the power reductions will be or if they will cause job cuts, he said.[pro_ad_display_adzone id=”70560″]
“All these things are hitting us at the same time: the low copper price and the power deficit,” said Sikamo.
Bestty Phiri Ltd., spokesman for state-owned power company Zesco Ltd., said 148 megawatts was available for import from South Africa and Mozambique from September through December. The amount available for purchase after that would shrink, he said by mobile phone.
‘Perfect Storm’
“It’s a perfect storm,” Robert Liebenthal, a Lusaka-based independent economist, said by mobile phone Wednesday. It’s “blindingly obvious” that some mining operations will have to close as a result of the power shortage, he said.
Mining companies earlier this month agreed to a voluntary reduction in power use of 10 percent to 15 percent.
Zesco has a 560-megawatt shortfall after water levels fell at the hydropower dams it relies on for more than 90 percent of its supplies. Zambia’s normal generating capacity is about 2,300 megawatts.
As a result of the power crisis and a tax dispute earlier this year, copper production will probably drop below 700,000 metric tons in 2015, Liebenthal said. Zambia produced about 708,000 tons of the metal last year.(Bloomberg)
