Written by Dr. Godwin Beene – Government Affairs Specialist at First Quantum Minerals Zambia
Logistical operations and freight movement have continued to play a vital role in the growth of the mining sector in Zambia.
Mining, as a business, has a delicate value chain that must operate at optimal efficiency at every stage for that value chain to remain viable. An efficient transport sector that connects key industries to global markets, particularly one to facilitate the movement of heavy freight from the source in a timely and cost-effective manner, as well as getting metals to ports on time is critical to the smooth function of mines such as First Quantum Minerals’ operating in a land-linked country. A lapse at any stage of the process will negatively affect the remaining stages.
An efficient haulage system can have a negative impact on a mine’s productivity in respect of inflows of mine consumables and transportation of capital equipment and outflow of anodes, cathodes and concentrate.
First Quantum Minerals’ Sentinel Mine in Kalumbila and Kansanshi Mine in Solwezi cannot afford interruptions in the production cycle, whether this be due to inflows of reagents, fuels, spares or movement of its products and people.
It may not be that obvious to many, but stockpiling of concentrates and metal due to unavailability or inadequate transport is bad for mining business as it ties cash to the floor.
FQML endeavours to ensure neither of these situations arise. It would create a catastrophe which would immediately be felt not only by the Treasury but by many sectors that rely on the company’s multiplier effect.
So, how does FQML ensure stability and continuity in the transportation business associated with it?
FQML managers operate and run the mines very productively and efficiently. Cost-effectiveness as an efficiency parameter requires that the company engages/partners with transporters who understand FQML’s business, are competitive and in themselves, efficient.
The company supports the development of the local and competitive transport sector to handle its (potentially) ever-growing production output.
In its quest to efficiently move its copper to ports, FQML achieved a feat recently by partnering with a willing local transporter to open a new trade route between North-Western Province and Walvis Bay, which has made accessing the Namibian port much cheaper and faster. This local transporter rehabilitated the 220km road between Kasempa and Kaoma at its own cost under a memorandum of understanding with the Road Development Agency (RDA).
Without FQML taking on this initiative, the company would still be suffering transportation charges to cover the 400km run via Chingola to the ports, let alone a two-day delay to catching a cargo ship. The multiplier effect from this initiative is more than employment creation by the transporter, but one ought to think of the commercial developments that are happening along the newly rehabilitated and now busy 220km connector.
The impact of an improved road network runs much deeper than mere infrastructure development. It serves as a launchpad for community growth. FQML’s copper business once again is dropping kwacha in the Zambian community, albeit quietly.
Can there be more that can be done to assist with the transport sector development in Zambia? The mining Industry is notorious for availing opportunities where there was hitherto none. The developments that have mushroomed in NW Province following the opening up of large-scale mining barely 16 years ago attest to this assertion.
If the Sentinel life of mine were able to extend well beyond the next two decades then perhaps this would justify the construction of a rail line to Kalumbila; not just to connect cargo to and from the Copperbelt, but perhaps to reconnect to and revamp the old Bengwela track; especially with improved security in the broader region. But sadly that is just not possible; the Sentinel life of mine simply just doesn’t support this aspiration; it doesn’t make economic sense.
FQML has been pushing for the establishment of a Multi-Facility Economic Zone (MFEZ) in Kalumbila. Goods into the MFEZ and products out of the factories in the MFEZ would require transportation to Zambian consumers, the mining Industry of the DRC and to the Angolan Ports.
FQML mining investment aside, if there could be a more enabling investment climate to attract opening of new big (low-grade mines) to generate volume like FQML’s with long leases, then the rail line project that has been on the cards for this long could be a reality. It would promote healthy competition in the transport sector by challenging road transport’s monopoly on haulage.
After all, healthy competition plays a key role in innovation and overall growth of a sector. Until then, there only remains a tremendous (and open-to-all) opportunity for Zambian truckers to compete for business with FQML’s mines.
Safe and efficient transport systems provide real socio-economic opportunities, which, when adequately exploited, result in increased investment in the area, in turn creating a wider market for new products and improved employment opportunities.
In that RDA worked with a local transport company to develop a new route to ports, GRZ was demonstrating its support for the haulage companies. Providing a conducive operating environment for the transport sector to continue to play a significant role in boosting the economy and reducing the unemployment rate in rural communities across Zambia is a much-needed action on part of Government.