Africa's copper production will maintain a compound annual growth rate of 4.5% in 2024
Despite the impact of the new crown pneumonia epidemic in 2020, African copper production is expected to maintain a slight growth. Due to the lockdown measures, most of the businesses of major copper producers in Africa were not affected by the epidemic. In addition, the number of new cases in Congo (DRC) and Zambia is lower than at the beginning of the year, and there is no sign of another outbreak.
This year's increase in production capacity at Glencore PLC's Kamoto mine and Zijin Mining Group's Kolwezi mine will offset the production losses caused by the shutdown of Mutanda. In the next three years, Kamoto Mine will gradually increase production to reach full capacity. Due to improved ore grades and increased processing capacity, First Quantum Minerals Ltd.'s Trident-Sentinel and Barrick Gold Corp.'s Lumwana (Lumwana) It is expected to achieve double-digit year-on-year growth. In general, it is expected that in 2022, with the restart of Mutanda and the start of multiple projects, the growth rate of copper production in Africa will rebound. By 2024, copper production in the region is expected to reach 2.9 million tons.
The rapid growth of copper production in Africa has benefited from the great contribution of Congo (DRC). In 2012, Congo (DRC) replaced Zambia as the largest copper producer in Africa. The Central African copper-cobalt metallogenic belt located in the border area of the two countries is the largest and highest-grade sedimentary copper belt in the world. The copper mine has some important production projects, the largest of which is Kamoa-Kakula. The underground mine will mine the Kakula and Kansoko deposits in the first three stages of its development plan, and is expected to produce an average of 237,000 tons of copper per year within 37 years. On the other hand, Jinchuan Group’s Musonoi and China Nonferrous Mining Corporation’s Kambove project are expected to produce 31,000 tons and 28,000 tons respectively.
Botswana will also significantly increase its output through the construction of the Khoemacau project of the private equity Cupric Copper Company. The start-up project is expected to start production in 2021, with an average annual output of 62,000 tons within the 21-year design period. The expansion plan is expected to increase the output to 100,000 tons/year. The Tshukudu project of Sanfire Resources Company announced the latest feasibility report, and the project has entered the development stage. The open pit mine plans to produce approximately 30,000 tons of copper per year within 12.5 years.
As the epidemic prevention and control hindered underground operations in the second quarter, South Africa's copper production is expected to decline in 2020. Most of the output comes from the Palabora mine of Hebei Iron and Steel Group. In addition, there are many copper production by-products from metal mines. Once put into operation, Orion Minerals Ltd.’s Prieska zinc-copper and Ivanhoe Platreef’s total output (approximately 28,000 tons/ Year) will offset some of the impact of mine closure.
In sharp contrast, due to various factors, Zambia's mining industry has basically not seen any major development in the past few years. The government implemented a new tax law in 2019: the minimum tax rate has also been increased by 1.5% on the original basis; and when the price of copper ore exceeds US$7,500/ton, the maximum tax rate will be increased from 6% to 10%. Repeated changes in the tax system will delay investment and hinder new projects or expansion of existing mines.
The national weighted-average all-in sustaining cost (AISC) of Zambian mines is above 50% of the cost curve. Taking into account the assets in the life cycle, higher maintenance costs and labor costs continue to increase. Since 2018, regional exploration investment has also shown a downward trend. Although Zambia has focused on grassroots exploration, basically no large-scale projects will be launched in the next five years.
Nevertheless, the profit margin of the mine has improved. The average price of copper in 2020 will reach US$6,159/ton. Due to currency depreciation and reduction in the amount of mineral processing, the cost of mines has been reduced, and the regional weighted average full continuous cost will increase to $1.77 per pound. Companies also quickly adopted measures such as retaining capital or expanding their scale of operations; the impact of higher royalties was not as obvious as initially considered.
Driven by China's manufacturing, construction and automobile industries, consumption of refined copper has grown strongly. And developing countries like India, due to population growth, copper demand will also increase. With the improvement of economic conditions, by 2024, the gap in refined copper will reach 220,000 tons.
With the support of large and medium-sized mining projects, Africa has sufficient capacity to maintain its current production status; however, in order to make better use of future market conditions, it must make a lot of investment and improve its economic conditions in order to sustainably translate into increased exploration activities And developable assets.
