The second-largest copper producer in Africa, Zambia, has suffered a 30% drop in revenue over the three months to April due to the COVID-19 pandemic and the fallout could last for at least 12 months, the Chamber of Mines has said.
Severe global restrictions on movement have hit mining supply chains and hindered the export and sale of copper, the mining industry association said, hurting company revenues and government coffers.
Copper is Zambia’s main foreign exchange earner and a key driver of tax revenues.
The fall in mining revenues is mirrored exactly in the fall in mineral royalty payments, as royalties are levied on each tonne of copper that is sold.
Royalty payments are estimated to have come in at $60 million to $65 million over the three months from February to April, around two-thirds of the $90 million that was expected.
A plunge in copper prices has also dented companies’ revenues.
Mining companies have also seen costs increase as they implement COVID-19 prevention measures to ensure the safety of workers and surrounding communities, the Chamber of Mines said.
Zambia’s mining companies have been battling ever-higher costs for years, and the chamber is concerned about the potential consequences of such a big hit to earnings occurring now.
The chamber said mining firms would likely be grappling with revenue pressures due to the pandemic for at least 12 months. Mining companies operating in Zambia include First Quantum Minerals, Glencore, Barrick Gold Corp and Vedanta Resources.