By Nasreen Seria
Bloomberg) — Zambia’s Finance Minister Situmbeko Musokotwane said he sees a “glimmer of hope” for Africa’s largest copper producer as prices for the metal improve, prompting companies to reopen mining.
The resumption of production at Luanshya Copper Mines and continued output at Mopani Copper Mines Plc was a “positive indicator,” Musokotwane said yesterday in an interview in Dakar, Senegal, where he is attending the African Development Bank’s annual meeting.
Copper has gained 42 percent in London this year, after plunging 64 percent in the second half of 2008. Copper makes up two-thirds of exports in Zambia and the slump in prices slashed fiscal revenue and forced the government to seek more than $200 million in emergency loans from the International Monetary Fund to boost foreign currency reserves.
“There are glimmers of hope,” Musokotwane said. “With these mines resuming production, we can maintain production. Yes, growth won’t be as high as last year, but we are not talking about stagnation.” The government may not meet a 5 percent economic growth target for the year, he added.
China Non-Ferrous Metals Mining Africa Corp. agreed this month to invest $400 million in Luanshya to restart and expand operations, the minister said. Mopani Copper Mines, which is majority-owned by Glencore International AG, said on April 29 it was dropping plans to halt output at its Nkana and Mufulira operations.
Copper traded as high as $4,465 a metric ton in London today.
Zambia will probably earn only half of the $140 million in mining taxes it estimated last year it would receive, Musokotwane said. That will push the fiscal deficit to 1.8 percent of gross domestic product, compared with 1.2 percent in 2008, he added.
The IMF on May 1 agreed to loan Zambia an extra $256.4 million over the next three years to boost foreign exchange reserves, with $160.1 million to be disbursed immediately.
“It was front-loaded,” Musokotwane said. “That will help to calm the financial markets. It is going to help improve the reserve position of the central bank, but it also gives them room to borrow more from the domestic market.”
Zambia will also seek funds from the World Bank, the African Development Bank, commercial lenders and private companies to help pay for the construction of roads, power networks and water facilities in agricultural areas, Musokotwane said.
“We see this crisis as an opportunity to deal with the issue of diversifying our economy,” the minister said. “We want to focus a lot on infrastructure. We need access roads, we need to take power there, to develop water resources so that these natural resources can be harnessed.”
Musokotwane, 52, was appointed finance minister on Nov. 14 after working for more than a year as a presidential economic adviser.
To contact the reporter on this story: Nasreen Seria in Dar es Salaam on firstname.lastname@example.org