Zambia Minister of Mines Richard Musukwa says that the copper producing nation is seeking a compromise solution with bondholders and does not expect them to seize its mining assets even though it defaulted on part of its debt last week.
Musukwa also said that Zambia has no plans to sell its shares in mining companies to raise cash after Africa’s 2nd largest copper producer failed to pay the $42.5 million coupon on its Eurobond debt on Friday.
“We don’t expect Zambia’s assets to be auctioned or taken away,” he told a news conference. “We are very positive that we will get a win-win situation between the bondholders and the government.”
Even before the coronavirus pandemic caused a global economic slowdown, Zambia was struggling with mounting debt.
Data from Lusaka showed that Zambia’s total external debt stock stood at $4.8 billion, or 18% of gross domestic product, by the end of 2014. Five years later, it had more than doubled to $11.2 billion, or 48% of GDP. The IMF predicts a rise to nearly 70% by year’s end.
A plunge in copper prices prompted mining giant Glencore to shutter its Mopani Copper Mines, which accounted for around 9% of the country’s copper output.
Musukwa said negotiations with Glencore on increasing the government’s stake in Mopani – a result of the disagreement with the government over the temporary closure – were nearing a conclusion.
The minister said Zambia’s 2020 copper production was expected to be 820,000 tonnes and that rising copper prices would encourage miners to produce more.
According to figures from the Ministry of Mines, Zambia produced 646,111 tonnes of copper between January and September 2020, up from 590,321 tonnes in the same period last year, a 9.45% rise.
The price of copper has fluctuated wildly this year.
Since the COVID-19 pandemic hit world markets and sent copper plunging in March, the London copper price has rallied 60% and hit its highest level in more than two years on Monday.