Maravi

Rise in copper output to strain infrastructure

Rise in copper output to strain infrastructure
By Chiwoyu Sinyangwe
Wed 01 Dec. 2010, 04:03 CAT

THE projected in-crease in copper output in the country is going to put extra strain on the already weak infrastructure in the country, says a key economic analyst at Standard Chartered group.

Razia Khan, regional head of research for Africa region of Standard Chartered Bank, said the local mining sector has had several years of strong mining growth, with copper output rising an estimated 20 per cent this year to over 720,000 tonnes. Khan said pending infrastructure bottlenecks were likely to pose the most important headwinds to growth.

“Zambia’s infrastructure is already under strain from rising copper output, much of which is transported by road,” Khan said.

“Constraints on power generation capacity – which will only increase meaningfully in the medium term – may also cap mine output plans. Nonetheless, capital spending is set to rise sharply in 2011 in an attempt to address infrastructure concerns.”

Khan said the country’s copper output would continue to surge.

“Significant increases in copper output will continue to underscore Zambian GDP gross domestic product growth in the coming year, with progress towards reaching a 2012 production target of one million tonnes well underway,” Khan said. “Having already achieved a doubling of output on the Copperbelt before the crisis, Zambia now looks set to do it again.”

She said although the country’s revenue collection looks likely to outperform targets by 12 per cent in 2010 due to robust economic growth, spending pressure had also escalated.

“This should intensify in 2011, an election year,” said Khan. “Revenue collection ratios have been fairly static in recent years despite the copper boom, although we project that the ratio will rise moderately to 18.5 per cent of GDP in 2011. Rising copper prices and a sustained trade surplus have driven kwacha gains.”

Labels: COPPER, INFRASTRUCTURE, ROADS

posted by MrK @ 3:11 PM