Zambia’s government is making strategic moves in the copper market with the establishment of a metals trading company in partnership with commodity trader Mercuria. This initiative has been described by an analyst as a “level-headed and intentional approach” compared to previous interventions in the sector.
The partnership, formed between Mercuria and Industrial Resources Limited, a subsidiary of the Industrial Development Corporation (IDC) – Zambia’s government investment arm, is aimed at boosting copper production to 3 million tonnes annually. This collaboration is seen as a bold step in Zambia’s resource governance strategy, focusing on developing institutional marketing and trading capacity for copper, enhancing transparency and efficiency in mineral trading, and expanding Zambia’s participation in global commodity markets.
While specific details on timelines, financing, and revenues have not been disclosed, IDC’s chief executive Cornwell Muleya believes that this initiative will position Zambia as a key player in international markets. Zambia, ranked as the world’s ninth-largest producer of copper in 2022, heavily relies on copper exports to drive its economy, with the metal contributing almost US$10bn to its GDP of US$29.2bn in 2022.
The government’s efforts to establish a state-owned trading department have been ongoing, with a target to triple copper production by 2031. Recent developments, such as settlements with mining companies like Vedanta and investments by companies like Barrick Gold, have paved the way for increased production in the coming years. The partnership with Mercuria is seen as a strategic move to position Zambia ahead of the expected boom in the copper market.
The shift towards establishing joint ventures with experienced companies like Mercuria comes after previous attempts at nationalization of the mining sector faced challenges. The current administration has opted for partnerships to maximize national benefits and foster local capacity building and skills transfer. This approach is seen as more business-friendly and conducive to cooperation with private entities.
Resource nationalism is gaining traction across Africa, with countries like Burkina Faso, Mali, and South Africa taking steps to nationalize key mining assets. In Zambia, the government’s partnership with Mercuria reflects a strategic approach to maximizing the benefits of resource extraction while fostering cooperation with private entities.
In conclusion, Zambia’s copper sector is poised for a shake-up with the government expanding its role in metals trading through strategic partnerships. This move is aimed at boosting copper production, enhancing transparency, and efficiency in mineral trading, and positioning Zambia as a key player in global commodity markets. By partnering with experienced companies like Mercuria, the government is taking a proactive and business-friendly approach to resource governance, setting the stage for sustainable economic development in the country.