A decision taken by the London Metal Exchange (LME) to review its requirements for the source of copper could have severe repercussions for Zambia’s mining sector despite the mooted regulations being aimed at the Democratic Republic of the Congo (DRC).
The news emerged over the weekend after Bloomberg reported that the LME was looking at ensuring “that no metal traded on the bourse has links to child labour, conflict or corruption.”
The report added that “copper producers that buy from Congo will be categorised as high-risk suppliers alongside manufacturers of tin and cobalt.”
The news is said to have infuriated executives at the LME who are scurrying to find out who leaked the decision prior to it being officially announced. The LME’s intention to restrict the trading of metals from sources suspected of human rights violations on its bourse has also reverberated through Zambia’s mining fraternity which buys the lion’s share of the DRC’s semi-processed ore concentrate.
It means that at least four leading Zambian companies that source copper concentrate from its neighbour to the east will have to carry out audits in accordance with the LME’s latest rights-related criteria. In addition to the impact it could have on the flow of concentrate to Zambia’s major mining companies, “some other companies also buy semi-refined products such as blister copper from Congo’s copper belt region,” Bloomberg wrote.
African Mining Market also reported that “the designation will mean copper producers could be removed from the LME’s list of deliverable brands unless a third-party auditor signs off on the sourcing standards.”
The news is expected to further strain and frustrate producers in Kitwe, Ndola and other Zambian Copperbelt centres – principal contributors to that country’s economy. In 2016 South African miner Glencore suspended its mining operations in Zambia after its electricity supply was cut by Zambia’a power producer, Copperbelt Energy.
Widespread power issues at the time cost Glencore around $3m per day, imperilling 4 700 jobs after the company stopped mining. Meanwhile Zambian Business Times earlier indicated that unforeseen fluctuations in the mining sector could adversely affect an economy that already appeared to be on the road to ruin.
The authoritative journal reported recently that although Zambia was not exempt from the minerals price boom on the LME, it remained to be seen whether government and industry were going to seize the opportunity “at a time when the nation grapples with fiscal imbalances that can be plugged by taking advantage of the commodity price trajectory to increase its tax revenue base.”
Zambia’s mining authorities were still processing the latest development by the LME at the time of going to press.
