By Nicholas Bariyo
KAMPALA Uganda--Zambia's five-month copper production increased
by 18% on year, boosted by expansions at a number of mines in the
country, the Central Bank of Zambia said Thursday.
The central bank said in a report that output rose to 473,249
metric tons during January to May, compared with 399,515 tons
produced in the same period last year as Zambian miners continue to
deliver on investments pumped into the mining industry five years
ago.
Companies such as Glencore Xstrata PLC (GLNCY, 0805.HK),
Brazil's Vale (VALE), Toronto-listed First Quantum Minerals
Ltd.(FM.T) and London-listed Vedanta Resources invested around $6
billion in Zambia during the global commodities boom, which peaked
in 2011. But a surge in global copper output could send prices to
around $6,000 a ton before the end of the year, from more than
$10,000 during the boom years, according to analysts.
Zambia's central bank said weak copper prices continue to hurt
the local currency, the Zambian Kwacha, exposing the southern
African nation to inflationary pressure. The country relies on
copper exports for more than 70% of its foreign revenue
earnings.
"The exchange rate of the Kwacha against the U.S. dollar has
exhibited a depreciation trend since the beginning of the year. As
at 11th June 2014, the Kwacha had depreciated by 14.9% against the
U.S. dollar," the central bank said.
The average international price of copper, used mainly in
construction and electronics declined by 10% to $6,720.86 a ton in
January to May 2014, from $7,471.77 during the same period last
year, the central bank said.
Mine workers in Zambia; peg their wage demands on inflation
rates. The central bank said that the country's annual inflation
hit 7.9% in June from 7.1% in December 2013.
Cobalt production, however, dropped 6% during the period to
1,951 tons, as some smelters scaled down production of the metal,
used in the manufacture of batteries, on concerns about a slowdown
in China, the world's largest consumer.
Mining companies in leading producers such as Chile and Congo
have been expanding operations in recent years, over supplying the
market. Last year, Congo trumped Zambia to become Africa's top
copper producer for the first time since 1998.
Write to Nicholas Bariyo at nicholas.bariyo@wsj.com
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