Prospects for Zambian exports of copper, nickel and cobalt have taken on a new shine with the accelerating move to electric vehicles and renewable energy around the world.Investment in logistics training, infrastructure and equipment is set to provide a glowing return after a number of years of stagnation.
According to S&P Global Platts, the tarnish from a rapid Covid-induced drop in copper prices during March has rubbed off.“Copper prices, a barometer of global economic health, have gained around 40% since the end of March and are back to pre-pandemic levels on prospects for increased demand for electrification projects worldwide, including for electric vehicles charging infrastructure.
“At the same time, a physical copper deficit looms due to mine curbs during the pandemic and recent lack of new investment in mine capacity. “The EVs (electric vehicles) and construction sectors are also pulling up nickel, aluminium, zinc and lead,” according to the latest S&P Global Platts analysis. Metals prices surged 7.3%, in July following increases in copper (+10.7%), zinc (+7.5%), nickel (+5.3%), iron ore (5.1%), aluminium (4.8%), and lead and tin (+4% each).
This is good news for Zambia. In addition to copper, the country has sizeable deposits of nickel and cobalt. There is some production of zinc and lead, but the existing known deposits have been mined out.Cobalt is a by-product of copper mining, with Zambia being the world’s sixth-largest producer.Neighbouring Democratic Republic of Congo (DRC) supplies 53% of the world’s cobalt.Zambian cobalt production has the potential to increase, with the discovery of a cobalt-rich copper deposit, known as the Nyungu copper-cobalt project at Lumwana West, which is situated in north-western Zambia.
Its discovery was announced in 2017 by Australian exploration company Argonaut Resources and its 90%-held Zambian subsidiary Mwombezhi Resources.Argonaut is currently raising funds for the development of the mine.
Nickel is being produced by the Munali mine, 75 kilometres south of Lusaka. According to the mine’s majority shareholder, the London-based Consolidated Nickel Mines (CNM), Munali is exporting high grade +10% Ni concentrate. Offtake agreements are in place. Production ramp-up is now on track to produce 3 300 tons of nickel in 2020, building up to 4 000 tons in 2021, it states.
Lead and zinc are currently being produced from tailings at the Kabwe mine site, which was shut down in 1994 after 88 years of production. It had one of the highest-grade lead and zinc deposits in the world.There is, however, evidence of lead pollution in the people living near the mine in the town of Kabwe (formerly Broken Hill).Zambia has attempted to take the lead in electric vehicle production in Africa, with an announcement in December 2018 that Zambian company Amilak was due to start assembly of electric utility vehicles.
According to Amilak’s LinkedIn page, the rollout has been delayed by red tape as the Road Transport and Safety Agency failed to approve the vehicle for use on the roads.The company’s Facebook page shows a truck charging through a standard plug at a filling station in May 2019.It is priced at US$17 300.While electric vehicle fever has not yet been sparked in Zambia and much of the rest of Africa, demand is growing rapidly in China and the We s t .It is not only electric vehicles driving physical demand for copper.
A new World Bank Group report, "Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition," predicts that the production of minerals, such as graphite, lithium and cobalt, could increase by nearly 500% by 2050 to meet the growing demand for clean energy technologies. It estimates that over three billion tons of minerals and metals will be needed to deploy wind, solar and geothermal power, as well as energy storage.Minerals like copper and molybdenum will be used in a range of technologies, while others, such as graphite and lithium, may be needed for just one technology – battery storage.
This means that any changes in clean energy technology deployments could have significant consequences for demand for certain minerals. The move to more sustainable power sources in order to reduce global warming is already increasing the demand for copper.According to Benedikt Sobotka, CEO of Luxembourg-based Eurasian Resources Group (ERG) and co-chair of the Global Battery Alliance, it is estimated that China will have installed an additional 200 000 public charging points and 400 000 private charging points by the end of 2020, with a total investment of US$ 1.4 billion. In the European Union — the world’s second-largest electric vehicle market after China – governments continue to promote electric mobility. Ironically, the poster child and leader for electric vehicles in Europe is Norway, which is also the region’s biggest oil and gas producer.It intends phasing out the sale of fossil-fuelled cars by 2025.Fully electric cars made up 42.4% of sales in the Nordic country last year, a global record, rising from a 31.2% market share in 2018 and just 5.5% in 2013 according to the Norwegian Road Federation.Electric vehicle penetration rates are rising across many other countries.In the Netherlands plug-in car sales rose by 139% year-on-year in July, with electric vehicles accounting for 16% of new vehicle sales in the country.Spain also reported record sales of EVs in July.
The UK saw plug-in electric vehicle market share hit 9% in July 2020, up significantly from 2.5% in July 2019.German electric vehicle sales were four times higher in July than in the same month last year.This is all good news for the Copperbelt, and the logistics companies serving the mines. James West, editor and publisher of the Canadian Midas Letter, predicts that by 2025, there will be over 5 million electric cars produced each month by Nissan, Volkswagen and Tesla alone. “The fact is, if you look at the future demand for copper from just transportation, the additional load on copper supply adds significantly to the roughly 25 million tons per year that is baseline global consumption,” he writes.