Pic Credit: Investors Hub
Copper mines have the option to import expensive back-up power to make up the 30% cut. Pic Credit: Investors Hub

On Tuesday, Zambian power providers and local mining companies agreed to cut power supply to local mines by 30% as the country is facing a significant power shortage.

Africa’s second-biggest copper producer will be supplied with 70% of locally produced power and will import 30% back-up power at a high cost.

President of the Chamber of Mines, Jackson Sikamo, said that the agreement was reached with Glencore Plc and First Quantum Minerals.

Zesco tables suggestion

In July, ESI Africa reported that with climate change wreaking havoc on water levels at the country’s hydropower plants, the government had plans to cut the mines power supply by 30%.

In efforts to address the power deficit, government spokesperson Chishimba Kambwili said: “Cabinet has explored the option of power-renting from ships docked at sea.”

Kambwili noted that state-owned power supply company Zesco, has no option but to ration electricity until the rainy season in October.

Mines to import back-up power

Sikamo told Bloomberg: “It’s important to understand that first of all there is no power.

“This meeting that we’ve had is a step in the right direction in terms of finding a solution to this problem.”

According to Sikamo, many Zambian mining companies are making a loss as copper prices remain at a six-year low.

“All these things are hitting us at the same time: the low copper price and the power deficit”, Sikamo said.

Zesco spokesman, Bestty Phiri, explained that there was 148MW of power available for import from South Africa and Mozambique from September through December.

Scarce resources

In July, Reuters reported that Zambia’s power deficit of 560MW is having a negative impact on the mining sector, which Zambia is largely dependent on for its significant contribution to the country’s economic growth— Zambia is the second largest copper producer on the continent.

According to Robert Liebenthal, a Lusaka-based independent economist, the country’s copper production could drop below 700,000 metric tonnes in 2015 due to the current power crisis as well as a tax dispute earlier this year.