We must benefit from high copper prices

By Daily Revelation Editor

Hedge Fund manager Pierre Andurand expects the price of copper to almost quadruple to US$40,000 a tonne in the next few years as soaring demand causes global stockpiles of the red metal to run low, according to the Financial Times.

The international media institution stated that Andurand’s conviction on the copper market had helped his $1.3billion commodities discretionary enhanced fund rebound from 55 percent loss last year that came as his bullish oil wagers backfired badly, stating that the fund was 83 percent up this year, with the gains coming from a broad range of commodities.

Copper, a critical metal at the heart of the energy transition has risen almost 20 percent this year, touching a record $11,000 a tonne this week.

Global news on the performance of metals is awash with the good news on the performance of copper, Zambia’s main export and foreign exchange earner.

The future projections for the red metal are even more promising on account of the role it shall play in the electrification of the world, including electric vehicles, solar panels, wind farms, but also military usage and data centres.

The Zambian government has targeted to push up the production of the metal to three millions tonnes per year from around 700,000 metric tonnes, and in doing the same have offered some incentives which many have interpreted as tax holidays to benefit especially friends of those in the government. The government argues that the aim is to attract the much needed investment into the country as there was no investment of note in this critical industry during the 10-year reign of the PF administration.

But arguments persist still that given the demand for the red metal on the global market and the constrained supply, some tax holidays that have been put in place are unnecessary as investors will still come given the lavish prices the metal is enjoying.

We agree that the government, while rightly seeking investment into the mining sector, should also be looking out to cash in on this windfall period when the prices are very high. There is no sense for instance to keep mineral royalties at three percent for instance as even the six percent they were reduced from was already too low.

We are of the considered view that this is the time the government should actually be increasing public ownership in the mine rather than reducing. Kansanshi rings a bell here.

Not too long ago, the government gave back Konkola Copper Mines to Vedanta while giving majority ownership of 51 percent in Mopani to IRH. However, local brains are still enmass in this country who can be entrusted to run the mines profitable to ensure that the capital flight being experienced every day from this country is actually secured within national borders and thus aiding this ever weakening Kwacha which is causing untold misery in this country.

Apart from attracting investment into the country, we wonder what other plans the government has to make gainful benefit from these very high copper prices.

We don’t want to start regretting in future about the period we are in thinking we could have done something. Yes, investment is important, but what is the benefit of the same if you do not control the means of production and whatever is being made from the investment goes out through capital flight? Because even those who will be employed are not guaranteed a future, either themselves or their children, as once the lifespans of these copper assets has expired, the investors will go out having made a lot of money while leaving behind holes and unemployment in their wake.