Mining companies should explain their quick response to effect cost- saving measures even when commodity prices are still above worst case scenarios, Mines Minister Christopher Yaluma said yesterday.
And Government has urged mining companies to diversify their operations by investing in power generation to stabilise production in the industry.
Mr Yaluma, who is leading a Zambian delegation to the “2016 investing in African Mining Indaba in Cape Town, South Africa”, told the 4th annual ministerial symposium yesterday that with the low electricity tariffs, mining companies could not expect Government alone to sustain their operations.
He said mining companies should consider going into joint ventures with Zambians and invest in a mix of power sources.
“We need some serious energy mix and mining companies must play a clear role. It is regrettable that we allowed the investors to do away with power plants when they took over the mines because they saw a cheaper source of power in ZESCO. We should go back to the ZCCM days when all divisions had their own power sources,” Mr Yaluma said.
He pointed out that it could have been a lighter burden on Government had the mining sector shown willingness to support the proposal to take electricity tariffs to cost reflective levels.
Currently ZESCO pays about 11 cents per kilowatt for electricity generated locally and about 19 cents per kilowatt for imported power.
Mr. Yaluma said Government was working on normalising this as mandated by last year’s meeting of SADC ministers of energy which resolved that all member states should attain cost reflective tariffs by 2019.
On measures taken by mining companies in times of low commodity prices, Mr. Yaluma said there was inconsistency in the way mining companies behaved when they decided to shed off their workforce on account of low prices and that they were not able to sustain their businesses.
He wondered why companies in Zambia rushed to retrench workers even when copper prices were currently going for US$4,000 per tonne, which was way above the US$2,500 which the mining companies had put up as the worst case scenario which could trigger such measures.
Mr Yaluma said it was gratifying that the African Union (AU), under the African Mining Vision, had directed countries to standardise instruments governing mining investment in all countries.
He said Zambia’s challenges stemmed from factors over which Government had no control, citing the low water levels that had reduced the country’s energy generation capacity.
This has consequently led to reduced low production in the mining and various other sectors. The challenges have been compounded by the low commodity prices which have greatly reduced on the country’s foreign exchange inflow.