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Opportunities still evident despite economic hardships

April 20, 2021by Nicholas Kabaso
  • Mining, as always, is a focal point for Zambia. According to Kitco, Midnight Sun Mining, the Toronto listed miner, announced yesterday that Rio Tinto Mining and Exploration has commenced its initial 2021 exploration campaign on Midnight Sun’s Solwezi Licence.  The initial 2021 work program budget is USD $3,200,000 and is expected to be completed in late June. President and CEO Al Fabbro commented, “After a lengthy rainy season and dealing with the difficulties of the COVID-19 pandemic, we are excited for Rio Tinto to begin the 2021 work program. With the bulk of this initial budget committed to drilling, this has the potential to be a very pivotal season for Midnight Sun and the Solwezi licences
  • In other local news, a Ghanian Fintech company Zeepay has acquired a 51% share of Mangwee Mobile Money through a private placement.  The deal is of strategic significance to Zeepay given Zambia’s location, allowing for further expansion into the SADC region. It speaks to the fact that despite the challenges currently faced by the economy, there remains those that are willing to find value and see the longer-term strategic importance of investing in the region.
  • Moving onto copper,  prices have received a boost from two sources this morning. First off, we have a weaker USD and secondly China’s largest copper smelters have recommended curbing new supply and using more scrap to assist the country in achieving its climate goals. Bloomberg reported the following – Fifteen smelters said the increased use of secondary metal would enable them to use less copper directly extracted from mines, and they’ll also use more blister — a less pure form of metal — as a raw material, according to Beijing Antaike
  • The broader creation of efficiencies remains front and centre for Beijing. China’s industry ministry stated yesterday that it would be compiling records in 2021 on energy consumption for key heavy users such as the aluminium, cement and steel industries for the purpose of promoting conservation and efficiency.
  • Moving over to the US, President Joe Biden has indicated that he is “prepared to compromise” on infrastructure and has asked the Republicans for a proposal by May. Biden met with a bipartisan group of lawmakers in a bid to try and build traction for the $2.0trln investment. At the centre of it all, is just how the $2.0trln will be financed and it would appear that a more popular approach would be to adopt a user-pay principle as opposed to simply extracting the funds from the broader fiscus. That might make the infrastructure spend more budget neutral, but will impose a burden on the private sector nonetheless. It may however be more palatable to the more conservative lawmakers that are against further increases in taxation.
  • Looking at the day ahead for the globe, in the absence of any material data, focus will rest with the financial markets, the USD’s behaviour, what equities are pricing in and the bond market. All three are interlinked with investors trying to find the balance between understanding the distortions created by money supply and identifying real value in a market environment still fraught with uncertainty as more worrying vaccine news is released, the pandemic being far from over, and the economic recovery largely dependent on the removal of restrictions on growth
  •  The Kwacha narrative remains unchanged although we could see the pressure on the local unit dissipate in the short term as Vat payments are due this week which will result in a withdrawal of some ZMW liquidity
  • Please click here to access the full Market Watch

Nicholas Kabaso

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