The Year in Review: Making Mining Work

This past year has been challenging, but also rewarding, for mining companies in Africa. We recap the issues, and emphasise their importance for the year ahead.

?“Year’s end is neither an end nor a beginning, but a ‘going on’, with all the wisdom that experience can instil in us,” wrote the American writer and outdoorsman Hal Borland.

These words are relevant, and seem particularly important, in light of the disappointing news very late in the year that Zambian President Hakainde Hichilema’s deal to restructure the country’s debt has collapsed. Zambia’s economy, not least its mining industry, was boosted in June with the announcement of the $6.3 billion arrangement with international creditors to ease the repayment schedule. The business community surged with optimism six months ago, but that sentiment is now dulled – and plans may need to go back to the drawing board.

We need to “go on”, however, and at JVChantete we are determined to do so with clarity, determination and purpose. The first thing this requires is to thank everyone at the company for their efforts during 2023. Our people are important, and, just as we expect their high performance, so we will continue to contribute to their growth and the upliftment of the communities we work in. We believe that all the people at JVChantete, and everyone touched by our activities, are on this journey together. ?

We also wish to thank our mining clients, financial institution associates, and supply chain partners. Together, we will go from strength to strength. Indeed, the government’s goal to boost Zambia’s ?copper production to three million tonnes by 2032 kickstarted some important structural changes in the sector this year, including reduced and simplified taxes and the strengthening of the regulatory body. The impacts are yet to be fully felt, but there has been an uptick in global mining companies’ Zambia operations or their announced investment plans. ?

This is heartening. The dilemma facing Zambia, like many countries in Africa, is that it needs sustained, high-level economic growth to deliver rapid industrialisation, infrastructure development and job creation. Open markets and business- and investor- friendly policies are critical to drive this growth. ?

The word ‘dilemma’ is used deliberately. At JVChantete we realise that the mining industry often faces difficult decisions in the pursuit of profit while acting with principles. We know, however, that good governance cannot be compromised; responsible mining is the only way to mine – in Zambia, in Africa, anywhere in the world. We pledge to partner with clients and industry players to this effect.??

Environmental issues are a growing theme.

This year the industry has increasingly started to understand the climate science issued by the Intergovernmental Panel on Climate Change (IPCC) and to adopt its guidance regarding reducing carbon emissions and the decarbonisation of supply chains. The COP28 conference in the last few weeks of 2023 marked about 30 years of negotiations, conceptual frameworks and guidelines with an agreed resolution to transition away from fossil fuels and to triple renewable energy sources by 2030. Environmental groups and many policymakers do not believe this is enough. Nevertheless, it will strengthen the momentum behind changes in the way all industries operate on the ground.

In emerging market mining operations, Zambia as a clear example, work now needs to be done in preparing for necessary measures such that they reconcile with the needs and aspirations of local communities. The transitioning process must be equitable, or, to use the IPCC and COP28 word, ‘just’.

Demand, supply and pricing

Copper prices declined from a late-January peak of $9,400 to $8,350 per metric tonne as we approach the year’s end. This 11% fall should be seen in the context of worldwide business and markets volatility; in many respects the global economy is still recovering from the impacts of the Covid-19 pandemic. Given that for much of the past ten years the copper price hovered well below $7000/t, 2023 may not have met optimistic forecasts, but it was not a poor year.? ??

Will 2024, and the next few years, be better? A global recession may be coming, as many major industrial economies – Germany and Japan, for instance – are weakening. The indicators from China are worrying: its manufacturing and construction sectors, and the country’s overall GDP growth rate, are stalling. If China’s GDP growth rate starts to fall, for every percentage point drop the sub-Saharan growth rate will fall 0.25%, according to the International Monetary Fund (IMF). So, on the surface, the short-term outlook for copper demand, although not gloomy, appears mixed. ??

But other analysts are positive, convinced that as the world’s decarbonation gathers pace the demand for copper will surge. This demand escalation will happen just as the metal’s supply is forecast to fall as some major mines close and exploration and new mine development takes time to be realised. Giant global investment bankers, Citigroup, in their 2023 Copper Book, project the metal to hit $12,000/t by 2025. “Oil’s historic price surge in 2008 will look like ‘child’s play’ compared with the expected copper boom by 2025,” says a Fortune magazine headline from late-August this year, referencing ?Citigroup’s forecast.

It’s clear, then, that Zambia’s Copperbelt and North-Western Province are connected to what the world will require for the transition to a low-carbon economy – and will still need for a significant range of secondary and tertiary industries. JVChantete, having navigated major hurdles in the past, and challenges in 2023, is well-prepared to thrive in the years ahead. We are geared for diversification, for technology changes, for a more competitive industry – and for growth.

As such, during the year we continued to invest in modernising and expanding our fleet of mining equipment, knowing that this is imperative for us to maintain world-class standards in all the work we do, from comprehensive open pit contracts and civil infrastructure projects to specialised blast hole drilling, crushing equipment and screening systems.

Let’s not let our guard down on safety.

Our industry is innately dangerous. Sadly, in our Zambia Copperbelt home base we have just been reminded how much so, witnessing eleven deaths at the Seseli mine in Chingola, with 26 people still missing at the time of writing. The country’s Ministry of Mines formally recorded twelve fatal incidents and fourteen dangerous near-miss accidents in the first half of the year.

The industry as a whole needs to do more, diligently and proactively, to improve occupational safety practices. A plea to our own workforce at JVChantete, the employees we regard as our most important and valuable asset: Be especially diligent and watchful regarding safety issues over the next few weeks. This is the holiday season for most people, but we keep working 24-7-365, because that’s what we do – we go on.

Because the most important part of looking back on the year is to look forward.

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JVChantete is one of the largest and leading mining contractor in Zambia. Contact us at [email protected] to discuss how we can help drive the productivity and profitability of your operations in 2024. ??