SHANGHAI, Aug 4 (SMM) - Zambia seemed to find it difficulty to achieve its economic growth targets this year, with its plummeting copper production and sharply falling copper prices. As a matter of fact, copper exports contributes to more than 70% of Zambia's export revenue. According to the statistics the Zambia Chamber of Mines released on August 2, Zambia's copper production fell 7.4% year-on-year in the first half of 2022 to 364,089 mt.
"So far half a year has passed, while the Zambian government's target of producing 1.3 million mt of copper in 2022 appears unattainable." Ridle Markus, an analyst from Absa Group, said in his email on Wednesday. He also added that the falling production in the agricultural sector might weigh heavier on Zambia's economic growth. The Zambian government has provided tax incentives to mining companies this year as well as improving the overall operating environment, but the copper production still fell steeply in the first half of the year.
Both two mines of First Quantum Minerals Ltd. in Zambia saw decreasing output in the second quarter due to enduring rains and COVID-19 restrictions. The output of the two mines combined accounted for more than half of Zambia's total output. Should mining companies not take measure to reverse the downward trend of production, Zambia's annual copper output is likely to fall for a second straight year, even after the copper prices rose to a record high in March. The government aims to increase the copper production to 2 million mt by 2026 and 3 million mt by 2031. To that end, the government is negotiating with Zambia's creditors to restructure the external debts that have amounted to $17.3 billion, the payments for which mainly come from copper export earnings.
The Ministry of Finance and the Ministry of National Planning of Zambia predicted in July that the country's copper production this year would increase to 833,480 mt from 802,967 mt in 2021. The mid-term budget plan also revealled that the production goal stands at 986,902 mt by 2025. Zambia's copper exports fell 8.4% in June from the previous month, according to official statistics.