Zambia’s Power Utility Declares Force Majeure on Mines’ Electricity Supply
Zambia’s state-owned power utility has issued force majeure notices regarding electricity supply to certain mines, as reported by an industry association, intensifying the strain on the copper market amidst unprecedented challenges.
According to the Chamber of Mines in Africa’s second-largest copper producer, ZESCO Ltd has informed several members of the organization that it cannot fulfill its supply obligations. However, specific details regarding the affected projects were not disclosed in the statement.
The market for semi-processed copper ore, commonly known as concentrates, is currently facing unparalleled tightness, with veteran traders highlighting the severity of the situation.
This pressure has been mounting for several months, triggered by the unexpected closure of First Quantum Minerals Ltd.’s Cobre Panama mine, coupled with production downgrades from Anglo American Plc and record-low output from Codelco, the world’s leading copper producer.
Zambia, a significant copper producer with nearly 700,000 tons of output last year and ambitious plans to quadruple production by 2031, hosts mines operated by companies like First Quantum, Barrick Gold Corp., and Abu Dhabi’s International Resources Holding.
However, the country, heavily reliant on hydropower for 85% of its electricity, is grappling with rolling blackouts due to an ongoing drought.
Last month, ZESCO’s CEO announced intentions to request mining companies to reduce their electricity demand by up to 20%.
As concerns mount, the Chamber of Mines emphasized the critical need for ZESCO and the Zambian government to prioritize safeguarding underground mines and smelters from potential irreparable damage caused by power outages.
While the mining sector acknowledges the inevitability of intermittent reductions in power supply, any losses incurred at vital assets would have catastrophic implications for both the industry and the economy.
