(Bloomberg) -- Zambia’s state power utility has served notices of force majeure on supply of electricity to some mines, according to an industry association, threatening additional pressure on a copper market going through an unprecedented squeeze.
The Chamber of Mines in Africa’s second largest copper producer said Wednesday that power utility ZESCO Ltd has notified several of the organization’s members that it can’t fully meet its supply commitments. The statement didn’t say which projects are impacted.
The market for semi-processed copper ore, known as concentrates, has never been as tight as now, Bloomberg reported last week citing veteran traders. The pressure has been building for several months, driven by the surprise closure of First Quantum Minerals Ltd.’s Cobre Panama mine, followed by downgrades to production guidance from Anglo American Plc. Codelco, the world’s top producer, has also seen production slump to quarter century lows.
Zambia – which last year produced almost 700,000 tons of the metal and aspires to more than quadruple output by 2031 – hosts copper mines run by First Quantum, Barrick Gold Corp. and Abu Dhabi’s International Resources Holding. The southern African nation, which relies on hydropower for 85% of its electricity generation, is experiencing rolling blackouts amid an ongoing drought. ZESCO’s boss said last month that he planned to ask mining companies to cut their demand by as much as a fifth. Zesco didn’t immediately respond to a phone call and text message seeking comments Wednesday.
ZESCO and the Zambian government must “prioritize the protection” of underground mines and smelters “from irreparable damage associated with power outages,” the chamber said in a statement. While the miners understands that it “can no longer be completely insulated from intermittent reductions in levels of power supply,” losses at key assets would be “calamitous” for the industry and economy, it said.
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