Zambia's copper mining industry is hopingto achieve and maintain production at over 500,000 tonnes a
year in the next few years despite low world prices,
deteriorating ores and shortages of mine inputs, industry
officials said.
    But Zambia's decision to abandon last May 1 a tough
International Monetary Fund (IMF) economic recovery program has
introduced an element of uncertainty into plans to restructure
the ailing industry and boost profitability, they said.
    Copper production by the government-controlled Zambia
Consolidated Copper Mines (ZCCM) for the 1987 financial year
ended March 31 improved slightly to about 471,000 tonnes from a
record 1986 low of 463,354 tonnes.
    "We are convinced that by the end of the 1988 financial
year, copper production could well be over 500,000 tonnes due
to greater availability of spares and equipment," a ZCCM
official said.
    ZCCM officials said the production of cobalt, another
strategic income earner, will also be tailored to meet demand.
    Finished production in 1986 was 4,565 tonnes, 911 tonnes
higher than the previous year and the best production achieved
to date.
    Protracted low world metal prices have badly hit the copper
industry in Zambia, the world's fifth biggest producer. Mining
is monopolised by ZCCM and accounts for about 90 pct of the
country's foreign exchange earnings.
    Production has also been seriously affected in recent years
by equipment breakdowns, deteriorating ore and shortages of
spare parts, fuel and lubricants. The 463,354 tonnes output
last year compared with a peak 1975 output of 700,000 tonnes.
    A five-year production and investment plan launched in 1984
by ZCCM is being funded by the European Community, the African
Development Bank and the World Bank.
    The plan foresees the shutdown of some seven mining and
metallurgical units on the grounds they are unprofitable.
    ZCCM, the second largest employer after the government, has
said it intends to lay off 20,000 of its 60,000 workforce as
part of the plan.
    More than 250 mln dlrs have so far been channelled into the
industry in a bid to improve efficiency and profitability under
the five-year restructuring plan.
    Company officials said although reserves were being
depleted, Zambia could continue to produce copper beyond the
end of the century, though at lower levels of production.
    Industry sources said ZCCM's projected pre-tax profit for
the financial year ended March 31 would be around 500 mln
kwacha. But with the current mineral export tax level being
levied, a net loss is likely to be registered.
    ZCCM recorded a net loss of 718 mln kwacha in 1986 compared
with a net profit of 19 mln kwacha the year before.
    Under the foreign exchange auction system introduced in
1985, ZCCM's profits from its foreign exchange earnings rose as
the value of the kwacha fell to 21 to the dollar from just over
two to the dollar.
    But on May 1, President Kenneth Kaunda abolished the
auctioning system, inspired by the International Monetary Fund,
and announced Zambia would pursue a go-it-alone economic
strategy based on national resources.
    ZCCM officials are still cautious over what effects the
break with the IMF will have on the industry's plans.
    "We are still consulting to see how the new measures will
affect us but it is too early to say just how we shall fare
under the new situation," Peter Hansen, director of operations
and third in the ZCCM hierarchy, told Reuters.
    Some analysts believe the new officially-fixed exchange
rate of eight kwacha to the dollar will hit ZCCM's export
profits.
    "Most specialists I have talked to tell me the break-even
point for ZCCM is a rate of 10 kwacha per dollar," Frederick
Chiluba, leader of the Zambian Congress of Trade Unions said.
    High production costs continue to bedevil the Zambian
industry.
    Zambia mines copper at a relatively expensive rate of 69
cents per pound, compared with 55 cents in the United States
and under 40 cents in Chile.
    The industry also faces transport problems due to Zambia
being landlocked. The government confirmed this year it had
stopped sBending copper south through South Africa.
    Over 80 pct of shipments, some 35,000 tonnes a month, are
sent by rail to the Tanzanian port of Dar-es-Salaam, while
5,000 tonnes go via Zimbabwe to the Mozambique port of Beira.
Transport has often been hit by shortages of wagons, spares and
fuel.
 Reuter
