Analysis: LEINA GABARAANE
THE most important gathering in the mining industry’s calendar took off last week as experts, executives and policy makers converge on Cape Town for the 2018 Investing in African Mining Indaba.
Former Minister of Mines and Minerals Development, Christopher Yaluma, was among those speaking at the event, participating in three debates: How can we close the trust deficit between government, industry and communities? Mineral Resources Policy and Investment Opportunities in African Countries; and Enhancing transparency and good governance in the Extractives Sector.
His extensive involvement is a measure of how important mining is to Zambia’s economy; and indeed how important the country is to the sector globally.
The mining sector in Zambia has over the years contributed massively to the growth of the country’s economy.
The country holds ten percent of the world’s copper, is one of the world’s largest cobalt producers, and is home to the world’s single largest producing emerald mine.
Both the government and the private sector have invested heavily in the mining sector, a situation, which has helped the industry remain stable for some time.
After a cyclical downturn, copper prices picked up last year and there is renewed optimism for last year’s price increases to continue this year.
This is good news for the Zambian economy, which has historically been based on a mining industry that contributes around 12 percent to Zambia’s GDP.
Copper accounts for 77 percent of the country’s exports of goods, according to the World Bank. Zambia is among the main copper producers in the world and in Africa, ranking 8th in the world, with China first, and is second in Africa after the Democratic Republic of Congo (DRC).
The mining sector has not only created jobs for the local people, including suppliers, it has also continued to contribute to revenue collection through tax payments.
The mining sector has continued to employ more people and maintain those that are already working despite in some instances ‘hard’ economic times, financial hardships and the low copper prices that have been faced.
The government has been proactive, dialoguing with the investors and advising them not to pull out or close mines which may leave Zambians jobless as a result. The mines have been understanding and cooperative and continued to operate.
With the expected high production of minerals and prices rising, it is expected that the mines may even start to employ more workers.
It is a measure of the importance of this importance that the mining sector plays in Zambia that my colleagues and I will be traveling to Cape Town again this year for the Mining Indaba.
And indeed among the high-profile speakers was Sandra du Toit, Executive Vice-President, Standard Bank, of which Stanbic is a member.
Our team traveled to South Africa with a sense of excitement and optimism, and also with a sense of urgency at the need to ensure we are at the forefront of the sector’s growth.
Mining is an expensive business, and stable long-term support from the financial sector is key.
But as any business person knows, it is this industry growth that can be the source of as much stress as excitement.
Growing any business needs capital both for asset investment and day-to-day expenses. And the mining sector, by the nature of its size, needs that in much larger amounts than most.
The finance sector thus plays a crucial role in ensuring that the mining sector has access to that much needed capital to take advantage of the upturn when it comes.
Stanbic Bank Zambia is committed to the mining sector, having invested and disbursed over US$3 billion over the past ten years. This is because we know that the mining sector is critical for the growth of the economy. Despite the global challenges the extractive industry has been facing, we are dedicated to supporting the sector because we believe that the industry remains an important foreign exchange earner for Zambia.
We want to see a situation where the country continues to develop and more people are employed. As a bank, we pledge our commitment to helping where we can. We are looking at whether the mining sector is developing and growing. We are also looking at areas that we can further support for further growth.
The author is chief executive of Stanbic Bank Zambia.