Zambia Mining Report Q3 2016

Date: June 1, 2016
Pages: 58
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: Z7C073D6D21EN

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Includes 3 FREE quarterly updates

BMI View: Zambia's mining royalty reversal will support the sector's investment outlook. However, both low copper and coal prices and the country's high degree of mineral policy uncertainty will continue to limit the sector's production growth until the country's Presidential elections in 2016.

Latest Developments & Structural Trends
  • The country's political uncertainty will continue to play a big role in whether future investment will materialize. For instance, over the first six months of 2015, the mining code was adjusted three times, increasing uncertainty among existing and potential long-term investors in the sector. In our view, miners will become increasingly concerned about the uncertain political climate and will limit or halt new projects from coming online altogether.
  • On April 4, 2016, Glencore stated the firm's intention to invest over USD1.1 billion in the firm's Mopani mine in order to develop three copper mine shafts that, with new technology, will extend mine life by over 25 years. Although this investment is positive news for the country's copper sector, it will not affect production levels out to our forecast period to 2020, as the mines will come into operation by 2023. Previously, on September 7 2015, Glencore announced that the company will immediately suspend the firm's Mopani copper mining operation located in Zambia. This will significantly hurt the sector's output growth, as the firm's Mopani mine accounted for 15.1% of the country's total copper production in 2014.
  • In February 2016, the Zambian government cut power rates for mining companies by 26% in an effort to persuade companies to invest in power generation. Despite this, power shortages will continue to pose a significant challenge for miners within the country.
  • We have revised down our thermal coal price forecast as the multi-year demand outlook is less positive than we had previously anticipated. We now forecast an average of USD51.0/tonne and USD52.0/tonne in 2016 and 2017, respectively (see: 'Thermal Coal: Lower Forecasts On China Revisions', March 10).
  • Nava Bharat Ventures Ltd (Nava Bharat), Zambia's largest coal producer, will be the sector's key growth driver through the firm's Maamba project, the country's largest coal mine. Zambia's coal output will increase from 470,000 tonnes in 2015 to 635,000 tonnes in 2020, primarily due to a combination of growing output at the Maamba mine and the state-run Collum mine.
BMI Industry View
  Table: Zambia Mining Industry Value Forecast (2014-2020)
Latest Developments & Structural Trends
Industry Forecast
Copper: Major Challenges Ahead
Latest Developments
  Table: Copper Production Forecast (Zambia 2012-2020)
  Table: Zambia - Major New Copper Projects/ Expansions
Structural Trends
  Table: Zambia: Hydropower Projects
Coal: Sold Growth, Despite Weak Project Pipeline
Latest Developments
  Table: Coal Production Forecast (Zambia 2012-2020)
  Table: Zambia - Coal Projects
Structural Trends
Industry Risk Reward Ratings
Zambia Risk/Reward Index
Africa - Risk/Reward Index
Key Takeaways
Latest Revisions
  Table: Africa - Mining Risk/Reward Index
Regulatory Development
Zambia- Regulatory Development- Policy Uncertainty To Curb Growth
  Table: Zambia - Trade & Investment Risk Analysis
Commodities Forecast
Commodities Outlook
  Table: BMI Commodities Price Forecasts
Competitive Landscape
  Table: Zambia Key Players - Comparative Valuation Metrics
Company Profile
Global Company Strategy - Vedanta Resources - Q3 2016
  Table: Select Commodities - Price Forecasts
Latest Financial Results
Company Strategy
  Table: Vedanta Resources - Key Financial Data
First Quantum - Q3 2016
Latest Results
  Table: First Quantum - Key Financial Data
Regional Overview
  Table: SSA - Government Involvement In Mining Sector
Industry Forecast Methodology
Risk/Reward Index Methodology
  Table: Weighting Of Indicators
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