MELBOURNE Nov 25 A plan by Zambia to put a duty
on copper concentrates imports could put a kink in the global
supply chain for the metal, industry sources said, by forcing
neighbouring Democratic Republic of Congo (DRC) to send surplus
mine output elsewhere.
The 7.5 percent duty announced earlier this month and due to
come into force at the start of 2017, is likely to disrupt
supply of refined metal in the early part of the year, just as
the global market moves away from surplus, helping to support
Zambia, Africa's second-largest copper producer, will
produce about 425,000 tonnes of copper metal this year,
according to consultancy GFMS, accounting for about 2 percent of
The country's smelters, including those run by privately
held Eurasian Resources Group (ERG) and India's Vedanta
Resources, currently source some 500,000 tonnes of
concentrate from the DRC, according to consultants Wood
This is made up of 400,000 tonnes from ERG's Frontier mine
and around 100,000 tonnes from La Sino-Congolaise Des Mines S.A.
(Sicomines), a joint venture between DRC's Gecamines, China
Railway Construction Corp. and Sinohydro Corp.
"It will not be viable for smelters to buy concentrates from
the DRC," said an industry source working in Zambia. "This
change will upset the supply chain for the first six months of
Miners in the DRC would be forced to look for other ways to
process their concentrate, such as sending it some 3,000 km
(1,860 miles) overland to Durban in South Africa for shipping to
China, a two-month trip, three industry sources said.
This would take the supplies out of circulation for several
months and delay production of up to 150,000 tonnes of copper
SMELTERS UNDER STRESS
Smelters in Zambia, where capacity far outstrips current
mine supply, are already struggling with low feed stocks after
miners including Glencore closed copper shafts as
prices fell to six-year lows.
The duty could mean they have even less concentrate to
process, at least in the short term, raising costs per unit.
"People are well aware that Zambian smelters are under
considerable stress to which this will add significantly," said
a source familiar with the matter.
The sources said the most affected smelters would be ERG's
Chambishi Smelter and Vedanta's Konkola Copper Mine which source
a significant part of their concentrate needs from DRC.
Officials at ERG did not reply to an emailed request for
comment. Konkola declined to comment.
The new duty was likely aimed at boosting Zambian refined
metal production from local concentrate supplies, but the move
could backfire and instead benefit smelters in other countries
such as China and India, Wood Mackenzie said.
Companies with local mines including First Quantum Minerals
and Barrick Gold could increase output, traders
said. Officials from both companies did not respond to requests
The Zambian government was also coming under sustained
lobbying from smelters to reverse its proposal, industry sources
"Some are already threatening to close down," said a Swiss
trader active in the region. "I believe that the duty is not a
(Reporting by Melanie Burton. Additional reporting by Nicole
Mordant in Vancouver and David Stanway in Shanghai; Editing by