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ZCCM Investments Holding aims for a bigger share of revenue from copper operations

March 24, 2021by Nicholas Kabaso
  • ZCCM Investments Holding Plc CEO Mabvuto Chipata in a recent interview indicated that the company wants a bigger share of the revenues from the copper operations it has stakes in as well as larger shares in other companies that produce the metal in the country. Chipata was quoted as saying “our strategy is to ensure that we increase our participation in the mines, and also at the same time find other ways of ex-tracting value. We are open to possible discussions of getting into streaming arrangements, copper splits.” Note, after long complaining that miners in the country do not often report profits and as result pay less tax, authorities in Zambia have progressively increased royalties. Now the state-owned mining company seeks to further increase its share of revenues as Zambia prepares to hold general elections in August. 
  • On the political front, President Lungu has indicated that the government is in the process of inviting regional and international electoral obser-vation missions to observe the August 12 general elections. 
  • On the base metals front,  copper shed ground overnight and the bearish tone has continued into the Asian session this morning. Concerns over rising COVID-19 cases in the EU remain the major driver for now. The market is factoring in the potential for harder lockdowns in certain parts which could delay any sustained economic recovery dampening demand for the red metal. 
  • Adding weight to the negative sentiment in base metals at the moment is the rising tensions between China and the West. What was hoped to be a thawing of relations during the first meeting between China and the United States last week turned into anything but that. Since then there has been sanctions levied from both sides which will undoubtedly stifle trading opportunities.
  • Shifting to global developments, Fed Chairman Powell played down the risks of unwanted inflation stating that prices would rise but it would be managed as Americans go out and spend following the massive injection of stimulus. He expects the economy to open as the health crisis fades but the market is not convinced as massive lockdowns in Europe show that nothing is certain. The Head of the World Heath Organisation called the increase in deaths and cases “truly worrying trends”
  • The fact of the matter is that a third wave has certainly hit Europe. The region is dealing with a huge surge in cases and at the same time the bloc’s vaccination rollout remains sluggish driven by supply snags and manufacturing issues. Its worth noting that EU leaders will be meeting virtually on Thursday to discuss possibly banning the export of vaccines. Germany the bloc’s largest economy is set to extend the lockdown in-to April while France has introduced new measures to curtail the spread.  France reported some 14 678 new cases yesterday taking the total number of infections to 4.31m and the death toll to 92908 after 287 deaths were reported yesterday.
  •  In the FX markets, a broader bearish remains entrenched on the Kwacha as debt challenges underpin negative sentiment, denting investment inflows. Meanwhile, risk appetite has waned as fears of third wave of COVID-19 hit FX markets. Extended European lockdowns have put paid to thoughts of a synchronised global rebound. The paring of risk taking has benefitted the USD which touched 92.412 in the Asian session, this is within striking distance of the 4-month high seen earlier this month at 92.506. The EUR-USD remains offered with the single currency hitting a low of 1.1834 this morning, a level last seen in November 2020. Commodity currencies have taken it on the chin, the likes of the AUD, ZAR and CAD are all on the backfoot this morning.
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Nicholas Kabaso

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