Zambia is Africa’s second largest copper producer, after the Democratic Republic of Congo, yet it’s not one often talked about. Given the expectation that the industry will see a boom as more widespread electric vehicle (EV) production begins to roll into action, the copper opportunities in countries such as Zambia are going to become ever more important.

An upstream and downstream mining company, in 2000, Chillerton Group was awarded four large mining licenses covering sites in the Zambian Copperbelt. It also entered into a historic development agreement with the Government of the Republic of Zambia.

The mining concessions under development boast some of Africa’s largest proven copper and cobalt deposits. We spoke to the company to find out about the state of the copper industry in Zambia and what the future might hold for the sector.

Karan Rathi: The Zambian copper industry has been consistently showing good signs of growth, especially in the development of infrastructure to support the sector, despite years of depressed copper prices.

As the largest free market producer on the continent, Zambia is a fantastic place to conduct business. With copper prices now trading at eight year-highs, producers are starting to look to replenish their resource inventories. Copper will continue to play a pivotal role in the country’s fortunes over the next decade. 

Thus, we have been extremely bullish on securing copper assets. Chillerton firmly believes the industry can lead the country to brighter days and prove an attractive destination for investors. I presently expect to be one of only a few mining companies capitalising on a copper powerhouse.

The demand for copper is growing. Estimates are that in two decades consumption will be up by 50%. The World Bank notes that the drive towards a low-carbon future could mean copper, along with other precious metals, could see 10-fold consumption increases by 2050.

It’s this historic shift in consumer behaviour that will ensure deep resilience within the market. The meteoric rise of Tesla, followed by an arms race amongst the giant car manufacturers towards the total electrification of their product lines, ensures that demand will continue to remain strong and consistent.

Of course, the transition towards green energy goes beyond futuristic-looking cars on our roads. According to McKinsey, 73% of global power generation will come from renewable energy sources by 2050. With an average of six tonnes of copper in every wind turbine, we are seeing clear industrial uses, backed by major public-private projects. 

The transition to more sustainable forms of energy will be built on a foundation of copper, the demand for which is rising quickly as more and more countries are adopting policies targeted at achieving a net-zero economy by the middle of this century.

The need for copper therefore seems a sure bet. And looking at today’s copper price, the markets seem to agree.

Our projects lie in the heart of the Katanga basin, adjacent to the Konkola Copper Mine, boasting a phenomenal size of copper and cobalt resource. The project has all the required infrastructure – rail, road, power, and water – to accelerate a robust development programme.

We have developed our resource base with a view to developing the asset in a carbon-neutral, sustainable fashion. Currently we are bringing our low-cost tailings project into production and have ongoing development plans for a larger open pit and underground mine. We are looking to ramp up production to around 50,000 tonnes per annum by 2024. 

We are currently working on a resource digitalisation pilot, this will be key to our evolution. Although at an early stage, we remain confident that technology diversification will bring a much-needed change to the mining sector that many of us have eagerly anticipated. 

The impact of the coronavirus pandemic on the mining sector has been like many other industries. However, the resilience shown by companies and operators should be applauded. Running sites with social distancing measures is not straightforward. Fortunately, most mines have fared well, sparing themselves from the demise of Covid-19 outbreaks. 

Certainly, the industry is no stranger to health epidemics and that experience has demonstrated its value. The industry should be proud of how it implemented social distancing, PPE, and rapid testing to great effect. It has also proved how ingrained support between private operators and surrounding communities is vital in a time of crisis.

In Zambia, the industry adapted swiftly by implementing the right measures to ensure safety of employees and other stakeholders. 

The demand for Zambia copper is clear. There aren’t many places in the world where you can find large world-class assets in stable jurisdictions. But to meet that demand, there is a need for more end-to-end investment, more exploration, and more local, sustainable mining sites. This requires extra vision and bravery from investors. 

I also believe that the Zambian copper industry needs to strive to vertically integrate upwards, i.e. value addition and start looking to manufacture copper/cobalt products in-country. This would reduce the industry’s carbon footprint and provide significant social and economic benefits.

As I have mentioned, there is so much untapped potential in Zambia’s copper industry as the country still remains largely unexplored. But none of this will be achieved if we have operators and investors that see Zambia’s future as exclusive to their own fortunes.

The Covid-19 crisis may also push the industry to rethink its supply chain and bring copper manufacturers closer to the mining houses. This would have a huge impact on the copper supply chain and inevitably the carbon footprint of the industry. Transparency needs to increase across the board and monopolisation by certain countries will have its own issues.

One of the positive outcomes of the recent pandemic has been the acceleration of environmental, social, and governance (ESG), the increased pressure by both retail and institutional investors for companies to behave in the right way. And so it is in Zambia.

Companies like my own have clear and accountable targets towards carbon neutrality. We understand how technology can play a role in boosting productivity and believe that ESG is not only nice to have, but central to the purpose of any successful business, especially in the mining sector.

Historically, mining has been an industry on the back of which empires are forged. Instrumental in the colonial expansion of the European continent, the extraction of gold from the Americas provided the capital needed to facilitate the notion of Manifest Destiny, the 19th century belief that white settlers were fated to expand their colonisation across what is now the US.

And while that age of empires has declined or died entirely, depending on who you ask, the mining industry still plays a vital part in growing developing countries’ economic strength, and in multinational interests’ further dominance of an increasingly globalised economy.

Perhaps nowhere encapsulates this neo-colonial conflict more than Brazil. Governed by the far-right President Jair Bolsonaro, Brazil holds 60% of the globally important and ecologically sensitive Amazon rainforest and more than 300 indigenous groups within its borders. Bolsonaro’s administration has affirmed its commitment to growing Brazil’s economy through increased mineral exploration and foreign investment in mining projects.

Legislation was proposed by Bolsonaro in February 2020 with the aim of opening Indigenous lands to mineral exploration, and further moves to increase mining activity in the country by rolling back environmental regulations and Indigenous protections have drawn local and national opposition, as well as international condemnation.

Brazil is already host to a strong mining industry - the country is second only to Australia in iron ore production and also holds rich reserves of nickel, bauxite, and other metals. In 2018, the mining and metallurgy sector accounted for more than 2.4% of Brazil’s GDP. 

Federal efforts to stimulate mining industry growth and attract new investment have often been presented as cutting red tape and streamlining the process for projects to get off the ground. 

“The regulation, control, and supervision of the activities of the [mining] sector is carried out by the National Mining Agency (ANM), which is conducting a process of debureaucratisation and reduction of the regulatory burden, to simplify the processes and reduce the grant deadlines,” says Alexandre Vidigal, the secretary of geology and mining at the Brazilian Ministry of Mines and Energy.

This process of reducing bureaucracy has been criticised both in Brazil and elsewhere, as it has been widely viewed as a euphemism for rolling back regulations designed to protect the Amazon rainforest and the indigenous peoples of Brazil while allowing multinational miners unfettered access to these culturally and ecologically sensitive lands.

Reuters reported that deforestation in the Brazilian portion of the Amazon rose 55% in the first four months of 2020 compared to the previous year, with environmental organisations attributing the rise to Bolsonaro’s emboldening of illegal loggers, miners, and ranchers.

While the Brazilian president lauds the opportunities presented to Brazil by opening indigenous lands to mining, indigenous peoples have called this “a project of death”. Despite the opposition, the Brazilian Government is determined to continue.

“The current government has a very well defined and clear agenda for the country's mining, with the objective of transforming mineral heritage into wealth and achieving the quantitative and qualitative growth of Brazilian mining,” Vidigal says. “That is, a growth of mineral production with responsibility, attentive to the best practices of sustainability, governance and management.

“With its vast territory, recognised geological potential, skilled labour and large investments in infrastructure and regulatory stability, Brazil has moved to a new phase in the performance of mineral activity, seeking to develop mining to develop the country.”

Vidigal says that current projects being researched focus on several strategic minerals in the country, including potassium for the manufacture of fertilisers as well as critical materials for batteries and renewable energy technologies such as copper, nickel, lithium, and graphite.

The country has aimed to court international interest in its mining opportunities and last year the Geological Survey of Brazil launched maps of mineral prospectivity in the country at PDAC 2020, one of the largest international mining conventions.

Opposition to the expansion of mining activities pursued by Brazil has come from both inside and outside the country and, notably, some of the fiercest international outcry predates Bolsonaro’s election as president. His predecessor, Michel Temer, abolished a conservation area larger than Denmark so that it’s potentially rich mineral deposits could be exploited. 

The reserve, Renca, was established in 1984 by presidential decree and can therefore be abolished without congressional approval. Temer abolished the reserve in 2017 but was forced to reinstate it a month later following international backlash, with NGOs and other environmentalist groups warning that the abolition would lead to a spike in deforestation.

Bolsonaro has, however, alluded to revisiting the abolition of Renca. Reuters reported in 2019 that, speaking at an event inside the reserve, President Bolsonaro said: “Let’s use the riches that God gave us for the wellbeing of our population. You won’t get any trouble from the Environment Ministry, nor the Mines and Energy Ministry nor any other.” 

There are concerns that Bolsonaro’s famous disdain for environmentalists could mean he is less swayed by public outrage in the event he opens Renca to mineral exploration.

There are also concerns over Brazil’s ability to adequately safeguard its minerals sector, owing to a recent history of dam collapses that have undermined confidence in the industry. 

“The collapse of Vale’s Mariana and Brumadinho tailings dams in Minas Gerais are evidence of an uncontrolled mining sector,” Ana Paula Vargas, Brazil programme manager at nonprofit organisation Amazon Watch, says. 

The Mariana dam disaster occurred in November 2015 when the Fundão tailings dam near the city of Mariana failed, flooding downstream villages and killing 19 people. Brazilian mining company Vale, co-owner of the site, promised such an incident would never happen again and it would improve safety at its other dams. But in January 2019, it did happen again – and worse. The Brumadinho dam disaster killed 270 people, most of whom were Vale employees.

Indigenous peoples, aside from the myriad cultural and economic reasons for their opposition to allowing miners unfettered access to their lands, are similarly concerned about mining safety issues, according to Brazilian NGO Instituto Socioambiental anthropologist Tiago Moreira. 

He says: “Besides not being consulted, indigenous people are worried about the environmental impacts of the mining activities. The mining industry is responsible for two of the biggest environmental disasters that have occurred in Brazil. Indigenous lands are located in a significant portion of the Brazilian Amazon and are fundamental for the physical and socio-cultural reproduction of indigenous peoples.”

President Bolsonaro has a noted disdain for red tape and an apathy to environmental issues, potentially meaning reasonable demands for regulations and protections go ignored and there is little scope for opposition and debate through traditional channels.

“The Bolsonaro regime espouses a reckless development model based on the limitless exploitation of natural resources,” Vargas says. “It is within this context that unrestrained mining activities are being proposed in the Amazon’s indigenous lands. Yet mining policies in Brazil are veiled attempts at economic progress, shown to advance the destruction of the environment and endanger indigenous lives.”

Vargas says that the current mining model is “predatory”, and that the proposed bill to open indigenous lands to industrial exploitation equate to an attack on indigenous peoples’ right to consultation, and “means the destruction of rivers, territories, and ways of life of indigenous and forest peoples”. 

Amazon Watch and the Association of Brazil’s Indigenous Peoples sent a letter to multinational mining company Anglo American in January 2021 urging the miner to publicly commit that it will not conduct mining activities on indigenous lands in Brazil, regardless of changes to the country’s legislation. News agency InfoAmazonia reported that Anglo American had been granted 27 permits to explore indigenous lands.

An Anglo American spokesperson said that the company “has withdrawn all its applications for mineral exploration in areas located within indigenous lands, but several of these applications have not yet been removed from the database of the ANM. Some current applications for exploration may refer to areas adjacent to indigenous lands, with some of the blocks infringing upon these territories. In these cases, it is the responsibility of the ANM to demarcate these blocks outside the indigenous territories.

“As a matter of principle, Anglo American is committed to only explore indigenous lands with Free, Prior, and Informed Consent from these communities. Furthermore, Anglo American is committed to a net positive impact on biodiversity in all regions where it operates.”

With Bolsonaro unlikely to be swayed, it could be that opposition turns to campaigners putting pressure directly on mining companies to stay out of indigenous lands, regardless of Brazil’s legislative encouragement.

To this end, campaigners have started raising questions around the economic credibility of Brazil’s mining aspirations; while revenues may be raised by mining more of Brazil’s natural resources, gains could be offset by financial losses incurred elsewhere through disrupting the Amazon rainforest.

“Bolsonaro’s proposed economic model is not sustainable,” Vargas says. “A recent study published by One Earth revealed that allowing mining within indigenous lands in the Brazilian Amazon could increase the devastating impacts this activity wreaks on the rainforest by more than 20%. It may also generate losses of up to $5bn due to changes in the Amazon ecosystem, such as the regulation of rainfall patterns, food production, and global climatic stability.”