Industry analysts report that the world is heading toward a major copper crunch. Within 10 years, shortages of the highly conductive metal could reach a critical level of shortage.
According to estimates issued by the CRU Group, the copper industry must spend $100 billion to shore up an annual deficit of copper that could reach 4.7 million metric tons by the year 2030. However, if no new mines are opened in the coming years, the shortfall could reach 10 million metric tons.
Why are world economies consuming so much copper?
One of the biggest drivers is the urgent push to meet the challenges of climate change. World governments and private industry are hard-pressed to reduce carbon emissions. That means ramping up large-scale projects for building alternative energy components, such as solar panels and wind turbines. These power generation tools use a lot of copper to transmit clean, green electricity.
New electric cars – with which the world hopes to replace all traditional cars by the year 2050 — are heavy users of copper. The metal is integral for building everything from wiring and pipes to engine components and batteries. All this is happening while building new mines is trickier and pricier today than it has been at any other time in history. One reason for the latter is stringent new environmental regulations designed to mitigate the negative landscape and pollution outcomes associated with copper mining.
The nation Zambia is the second-largest producer of copper in Africa. As demand for copper surges globally, the Zambian copper industry growth profile has matched pace. As foreign investment in Zambian copper mining flowed in, the export of copper came to comprise three-quarters of this south-central African nation’s export income.
One man who watches what’s happening with copper with keen interest is the founder and CEO of SAVENDA Group. Clever Mpoha built his $300 million annual company in large part on solving logistics and supply management problems that had long been plaguing the mining industry 20 years ago.
Speaking on the early days of building SAVENDA from a small company to a larger one, Mpoha said venturing into mining was “our first major diversification.”
“We noticed a boom in the mining sector … we also noticed there were many challenges in terms of supply. We knew we could be the solution to that problem. We started by supplying laboratory services and products before expanding into the supply of consultancy and heavy machinery.”
Mpoha said that he and his team worked hard to build relationships with operators in nations outside of Zambia, to establish supply sources that were reliable and easier to access. From there, SAVENDA continued to press its advantage by moving into medical supplies and the construction end of mining.
Before long, and because SAVENDA Mining was producing results, its clients began referring them to their sister companies. Soon, SAVENDA was booming along with the incredible growth of Zambian copper mining.
Even so, Mpoha sees numerous challenges ahead for Zambian copper mining, foremost of which is the enormous expense of opening new mines. Furthermore, the industry players that have the economic muscle and infrastructure to implement large-scale copper mines tend to be foreign-owned.
For example, some of the largest recent operators that have come to Zambia to mine copper include the Canadian firms Barrick Gold Corp and First Quantum Minerals Ltd. The gigantic Chambishi Copper Mine is owned by a Chinese company called the Non-Ferrous Company-Africa (NFCA). Another major competitor in the Swiss company Glencore PLC.
Together, these companies are Zambia’s largest private employers.
Clever Mpoha acknowledges that good-paying jobs and investment in the Zambian economy from outside sources are largely a boon to his country. It also provides an opportunity for SAVENDA Group because it can serve a host of logistics and supply needs for these thriving multination companies.
In a recent interview, Mpoha said:
“We should be thinking of how we can partner with big foreign companies to create manufacturing and processing companies for our raw mining produce into finished products.”
But as a Zambian patriot to the core, Mpoha would like to see a more indigenous role for his nation as the copper industry is set to expand exponentially over the next two decades. One way he believes Zambians can benefit more from its rich copper deposits is to look beyond mining itself and toward an “added value approach.”
“When you look at most mining activities, the focus is more on raw material mining than value-added products. The result is that return on investment is low. It should be the focus of every African business to find ways to add value to mine production and sell after value addition.”
Clever Mpoha believes there is no reason why Zambian-born companies cannot manufacture electrical wires, pipes, tubes, automobile parts, batteries –- and even pots, pans and jewellery made from copper. He suggests that Zambian business leaders should strive to always look beyond the fundamentals of selling raw materials when there are far more lucrative opportunities in developing the expertise to manufacture the high-tech implements that are building the future of the planet right now.
“The mining sector alone, if managed well by Africans, can build prosperity for many African states and its people. As entrepreneurs, we can also be a part of the solution and prosperity of the mining sector.”