Despite the impact of COVID-19 's epidemic, copper production in Africa is expected to grow slightly in 2020, S & P global market Caizhi reported on December 18. As a result of the blockade measures, most of the operations of the major copper producers in Africa were not affected by the epidemic. In addition, the number of new cases in the Democratic Republic of the Congo and Zambia is lower than at the beginning of the year, and there is no sign of another outbreak.
This year's capacity increases at the Camoto (Kamoto) mine of Glencore (Glencore PLC) and the Clovis (Kolwezi) mine of Zijin Mining Group will offset the production loss caused by the shutdown of Mutanta (Mutanda). In the next 3 years, the Carmoto mine will gradually increase production to achieve full capacity production. Trident-Sentinel of first Quantum Mining Company (First Quantum Minerals Ltd.) and Lumvana (Lumwana) of Barrick Gold Company (Barrick Gold Corp.) are expected to achieve double-digit year-on-year growth due to improved ore grade and mineral processing capacity. Overall, the growth rate of copper production in Africa is expected to pick up in 2022 with the restart of Mutanta (Mutanda) and the start of several projects. Copper production in the region is expected to reach 2.9 million tons by 2024, maintaining a compound annual growth rate of 4.5 per cent.
The rapid growth of copper production in Africa has benefited from the great contribution of the Democratic Republic of the Congo (DRC). In 2012, the Democratic Republic of the Congo (DRC) overtook Zambia as the largest copper producer in Africa. The Central African copper-cobalt metallogenic belt located in the border area between the two countries is the largest and highest-grade sedimentary copper belt in the world. The copper mine has a number of important production projects, the largest of which is Camoa-Kakoula (Kamoa-Kakula). The underground mine will mine the Kakoula (Kakula) and Kansoko (Kansoko) deposits in the first three stages of its development plan and is expected to produce an average of 237000 tons of copper per year over 37 years. On the other hand, Musonoy (Musonoi) of Jinchuan Group and Gangpov (Kambove) project of China Nonferrous Mining Corporation are expected to reach annual production of 31000 tons and 28000 tons respectively.
Botswana will also significantly increase its production through the construction of the Koamikao (Khoemacau) project of the private equity company Qiu Purek (Cupric) Copper. The start-up project is expected to start production in 2021, with an average annual output of 62000 tons over a design life of 21 years, and the expansion plan is expected to increase production to 100000 tons per year. The Chukudu (Tshukudu) project of Sanhuo (Sanfire) Resources Co., Ltd. has released the latest feasibility report, and the project has entered the development stage. The open-pit mine plans to produce about 30,000 tons of copper a year within 12.5 years.
Copper production in South Africa is expected to decline in 2020 as the prevention and control of the epidemic hindered underground operations in the second quarter. Most of this production comes from the Pala Bora (Palabora) Mine of Hebei Iron and Steel Group. In addition, there is the production of copper as a by-product of many metal mines. Once operational, Orion mining company (Orion Minerals Ltd.) 's Prisca Zinc and Copper Project (Prieska zinc-copper) and Ivanhoe (Ivanhoe) Platrev (Platreef) 's total production (about 28000 tons per year) will offset some of the mine closures.
In sharp contrast, Zambia's mining industry has not developed much in the past few years due to various factors. The government implemented a new tax law in 2019: the minimum tax rate has also been raised by 1.5 per cent, while when the price of a copper mine exceeds $7500 a tonne, the maximum tax rate will be raised from 6 per cent to 10 per cent. Repeated changes in the tax system will delay investment and hinder the expansion of new projects or existing mines.
The national weighted average total sustained cost (national weighted-average all-in sustaining cost, referred to as AISC) of Zambian mines is more than 50 per cent of the cost curve. Taking into account the assets in the life cycle, higher maintenance costs and labor costs are increasing. Investment in regional exploration has also declined since 2018, and although Zambia has focused on grass-roots exploration, there have been few large-scale projects on the ground in the next five years.
In spite of this, the profit margin of the mine has improved. The average price of copper will reach 6159 US dollars per ton in 2020. As a result of the devaluation of the currency and the reduction of mineral processing capacity, the mine cost will be reduced, and the region-weighted average total sustainable cost will rise to US $1.77 per pound. Companies have also quickly taken measures such as retaining capital or expanding the scale of their operations; the impact of higher royalties is not as obvious as originally considered.
Consumption of refined copper has grown strongly, driven by China's manufacturing, construction and auto industries. In developing countries such as India, demand for copper will also increase as the population grows. With the improvement of the economic situation, the shortfall of refined copper will reach 220000 tons by 2024.
Supported by large and medium-sized mining projects, Africa has sufficient capacity to maintain its production status quo; however, in order to make better use of future market conditions, it is necessary to invest heavily and improve its economic conditions. can be sustainably translated into increased exploration activities and exploitable assets.
(compiled by Sun Kai of Tianjin Center of China Geological Survey)
