Stanchart expects rise in Zambia's copper output

The Post reports on a press conference held by Standard Charted Bank regional head of research for Africa Razia Khan, at which Khan argued that that Zambia's copper output is still expected to increase despite the new tax legislation.

Khan, who had just returned from the Copperbelt Province where she met some mining companies' officials, said most companies had indicated that they would go ahead with their investment programmes. "We don't believe that we are going to see any significant decline in output as a result of this legislation. That is unlikely. We have spoken to the mining companies and so many of them are so far down the line in terms of their investment programmes. It doesn't make commercial sense not to proceed with those," Khan said. "But there is the question about new investment, the point that was made is that imposing a windfall tax based solely on copper price rather than the cost to the individual mining company of extracting that copper there is a situation that is going to arise that makes it much more difficult for the marginal players."

She further said no one was expecting a slump in copper prices. "That is unlikely even where we are now, but maybe gradual moderation overtime is possible given the state of the global economy," Khan observed. "On the whole, Zambian copper output is still expected to increase notwithstanding the near-term difficulties that are likely to be experienced because of power situation."

However, Khan said there was need to look very carefully at the measures taken and see if they had any effects on the economy.

"The government has done an analysis and suggested that Zambian mining companies are still going to be profitable even after the introduction of the windfall tax. But from the perspective of the mining companies, for a lot of international companies it's the choice of copper prices are at this level.

Where are we best able to establish our operations to take advantage of that?" asked Khan. "So it is not just a case of Zambia but it is the case of choosing between Zambia and other copper producing regions in the world."