Professional Documents
Culture Documents
Simon Payton
The time is ripe for investors to consider processing the copper and add more value by selling finished products made in Zambia to the international market."
President Banda, Lumwana, 17 April 2009
Source: Reuters
Concentration
Producers
(Smelting)
Refining
Wire Rod
Other Fabricating
Market Access: Mining is bound to the location of deposits, fabrication to world manufacturing
6000
6000
5000
5000
6000
4000
5000
3000
Germany
Mine Ref Prod Use
4000
3000
Russia
6000
Mine Ref Prod Use
4000
3000
Canada
Mine Ref Prod Use
2000
2000
1000
1000
2000
0 5000
5000
4000
USA
Mine Ref Prod Use
China
4000 3000
5000
S Korea
Mine Ref Prod Use
1000
0 6000
6000
2000
3000
5000
5000
2000
1000 4000
1000
4000
0
Mine Ref Prod Use
3000
Japan
Mine Ref Prod Use
3000
2000
2000
6000
Zambia
6000 5000
1000
1000
5000 6000
4000
3000
Peru
6000
Mine Ref Prod Use
5000
0
Mine Ref Prod Use
4000
4000
2000
3000
1000
Brazil
Mine Ref Prod Use
3000
India
Mine Ref Prod Use
2000
2000
1000
1000
5000
4000
6000
6000
Chile
3000
5000
2000
5000
1000
4000
4000
0
Mine Ref Prod Use
3000
RSA Australia
Mine Ref Prod Use
3000
2000
2000
1000
1000
0
Mine Ref Prod Use
Source: ICSG
A sense of proportion: See where the big margins (and the big risks) are.
Illustrative Wire Rod Fabrication Margin, compared with SXEW Cathode Production
(per tonne)
$
7000 6000 5000 4000 3000 2000 1000 0
Costs
Profit
NB In Copper fabricating, metal value itself is a neutral straightthrough item, except for the financing cost of metal in work in progress (from receipt to customer payment) 5
Castings
Source: IWCC
Access to Market: Semis industry responds to demand from the (complex) downstream value chain:
Semis
Wire Rod Wire Rod
Wire Drawing + Insulation
Intermediates
Components
Car Valve
Electrical Fitting
Extruded Rod
Rolled Strip Strip
Forging
Machining + Assembly
(Plating)
Tube Tube
Tube
Castings
Air-Con
Tap Body
8
ire
tru
le d
R ol
30 90
A llo y
Ex
0 30
0 25
C u
0 10
Source: Trade data
Outside mining, there is a lack of manufacturing industry to offer a customer base on which to build a copper processing industry RSA is significant, largely self-sufficient market; net exporter More distant markets present logistical challenges (squeezing margins)
10
Local copper cathode is available, but that may not be a big advantage
If copper cathode is sold to a local fabricator (with a saving on the cathode export freight cost) and processed for export, the freight cost is in effect transferred to the fabricators product, making it difficult to be competitive. The only gain is on the domestic market.
11
Copper cathode is not the only requirement: scrap and alloying metals are very important for some products
Input
Cu Cathode
Cu & Brass Scrap Primary Zn
Melt Cast
Hot Form
Continuous Casting (& In - line rolling)
Cold Form
Semis (product)
Wire Rod
Billet Casting
Extrusion, Drawing
Brass Rod
Slab Casting
Continuous Casting of Strip
Hot Rolling
Cold Rolling
Sheet, Strip
Cold Rolling
Sheet, Strip
Billet Casting
Extrusion
Drawing
Tube
Drawing
Tube
12
Mining
Concentration
(Smelting)
Refining
Wire Rod
Other Fabricating
Given the challenges, how does Zambia score on the key factors ? (/5=good)
Zambia
Access to markets Access to raw materials 1.5
RSA
3
China
5
Copper
Alloying materials Scrap Access to capital (land, plant and equipment) Access to labour
4
2 2 2
4
4 3 4
5
5 3 5
Subjective scoring
15
But RSA industry ready and waiting! (Potential partners in any Zambian growth.?)
16
Conclusions
1.
2. 3. 4.
5.
Copper is mined where it is found. Copper is fabricated where there is good market access For further processing of copper, having a market is more important than having access to copper cathode Local & regional market currently limited in size by lack of manufacturing base; need to fill that gap and attract manufacturing investment With improved logistics a local industry could engage in RSA market (Zamefa already present), but existing industry in RSA has the complete product range and is very competitive Scope for development: Zambian cable product range and exports could grow; some room for small-scale developments as a growth basis.
17
Thank You
19