accurate reporting??, page-2

Things hotting up for ZRL ,
looking forward to the upcoming copper drill results due out any time .


Another article posted released a few days ago this time in the Bloomberg press, focusing on how important copper will be for the future of Zambia.


Zambia Lures Vale,
Vedanta in $6 Billion Copper-Mine Expansion

QBy Carli Lourens and Anthony Mukwita - Jul 12, 2011 3:31

Copper plant in Lumwana, Zambia, owned by Equinox Minerals Ltd., owner of Africa's biggest copper deposit. Barrick Gold Corp., the world's largest gold producer, agreed to buy copper company Equinox Minerals Ltd. for $7.5 billion in April to gain control of its Lumwana mine in Zambia. Source: Equinox Minerals Ltd. via Bloomberg


Zambia, Africas largest copper- mining nation, is set to enter the worlds top five producers as Vale SA (VALE3), First Quantum Minerals Ltd. (FM) and Vedanta Resources Plc (VED) lead more than $6 billion of investment in the countrys mines.

If all the planned projects take off, Zambia is expected to overtake Australia and Indonesia to become the fifth-largest copper-producing country in the world by 2013, Sophie Chung, an analyst at Wood Mackenzie unit Brook Hunt, said yesterday in an e-mail. The countrys positive investment climate sets it apart from its neighbors, Brook Hunt said in a separate note.

Zambia has pledged not to take mines into state hands or impose windfall taxes, even as Tanzania and the Democratic Republic of Congo to the north, and Zimbabwe to the south, study measures to boost mining revenue as commodity prices climb. Zambia�s copper output, some 681,000 metric tons last year, may double to 1.44 million tons by 2015, according to Brook Hunt.

Many mining companies have managed to enter into extremely good development deals in their contracts, Jacob Lushinga, an economist at the Economics Association of Zambia, said June 20 by phone. The agreements include incentives such as favorable power rates and unrestricted ownership, he said.

The only other African country among the top 10 copper producers is Congo, ranked 10th, while Chile, China, Peru and the U.S. are the largest, according to 2010 data from Edinburgh- based Wood Mackenzie.

Vale, Glencore

Canadas First Quantum has said it may spend $1.9 billion on its Trident and Kansanshi mines in Zambia after losing the Kolwezi copper project in Congo in a 2009 rights battle with the government. Vales joint venture with African Rainbow Minerals Ltd. will invest $1 billion in Zambias Konkola North project, while Vedantas Konkola Copper Mines unit plans to spend about $1 billion over the next three years and Glencore International Plc will invest $500 million in its Zambian Mopani operation.

Copper producers are betting on increasing demand from China, the largest consumer of the metal used in wires and pipes, as the economic recovery fuels a building boom. Copper prices tripled to $9,600 a ton in London trading from 2008 through 2010, contributing to a commodities rally that saw nickel prices double and gold jump 62 percent.

In Tanzania, which has gold and tanzanite mines, the national planning commission in June recommended consideration of a so-called super-profit tax on miners. In Zimbabwe, the government passed a law this year that will force foreign companies to sell a 51 percent stake in mining assets to black Zimbabweans, while in South Africa the ruling party is studying mine nationalization following proposals by its youth wing.

Nationalization Mistake
Zambia nationalized its mines in the 1960s, a move that combined with falling copper prices to slow economic expansion.

It was a mistake to bring mines under state control as the government didnt have the funds or skills to run them, President Rupiah Banda said in a Lusaka interview last month.

This government wont make the same mistake, Mines Minister Maxwell Mwale said at Zambias first international mining conference on June 15, adding that the country is reaping the benefits of selling state-owned Zambia Consolidated Copper Mines Ltd.s assets, a process that started in 1996.

Investing in Zambia isnt without its risks. State-owned Zambia Electricity Supply Corp. said in May that prices may rise for mining companies by as much as 30 percent to help fund an expansion of generating capacity. Transport is hampered by the state of the road network, of which only 22 percent is paved, while the Tanzania-Zambia Railway Authority has said strikes on the rail line connecting the countries may slow expansion plans.

Investment Needed
Zambias transport infrastructure and power generating capacity require investment before the countrys potential can be fully realized, Brook Hunt said.

While Zambias copper output could reach about 1.5 million tons a year by 2016, 1.1 million tons is a more realistic expectation since projects arent always executed as planned, Eleni Joannides, a London-based analyst at researcher CRU, said in an e-mail. Finance Minister Situmbeko Musokotwane has said the country may more than double production in five years.

The nations economy will probably expand by 6.8 percent this year, the International Monetary Fund said in March. The country may record double-digit growth by 2015 if mining investment continues at the current pace, Musokotwane said in April. Copper exports generate 70 percent of Zambias foreign- exchange earnings, he said.

Chinese Demand

China is snapping up resources abroad to feed its growing demand for commodities. Companies including China Nonferrous Metals Co. are investing $2.4 billion in copper projects in Zambia, Chinese Ambassador Li Qiangmin said in January.

Zambias copper has also attracted miners traditionally focused on precious metals. Barrick Gold Corp. (ABX), the worlds largest gold producer, agreed to buy copper company Equinox Minerals Ltd. for $7.5 billion in April to gain control of its Lumwana mine in Zambia.

The countrys copper output is returning to levels last seen in the 1970s after falling to 250,000 tons a year in the late 1990s, when the metal generated 90 percent of the nations foreign-exchange earnings.

In 2009, Zambia scrapped a proposed windfall tax after the plan prompted legal action. The country is no longer considering such a levy, even as outsiders say it should demand more from producers amid price gains, President Banda said, adding that the copper companies help Zambia in other ways.

Maybe we dont get everything in taxes as such, but their responsibilities to the societies around increase as a result of the amount of money theyre getting, Banda said. I havent stopped to ask for a more equitable arrangement, but its good to look at it objectively. Its a continuous process.

To contact the reporters on this story: Carli Lourens in Johannesburg at [email protected]; Anthony Mukwita in Lusaka at [email protected].