Linking local economies with the mining sector Scoping Local Content Potential around the Copperbelt

The BGR Enterprise around Mining program (External link) aims at integrating the resource sector into local economies and hereby overcome its typical enclave character. Its instruments include studies and market analysis aimed at bridging the gap between industry and local suppliers and to foster local value addition. So far it has been active in Southern Africa (Madagascar, Mozambique, South Africa, Zambia) and Westafrica (Ghana), now it is focussing on the copperbelt.

The copperbelt is the paramount copper mining area in Africa straddling the border between southern DRC and northern Zambia. While Zambian mining production in the area is virtually limited to copper, the DRC also produces a significant amount of cobalt. The latter is a byproduct of copper production and has recently faced a substantial price hike as a result of a rising demand for batteries for electric vehicles. The BGR with the support of Kaiser EDP estimates the total operational expenditure of copper and cobalt mines in the region to be US$5.5 billion.

The BGR recently conducted a trip to the copperbelt via both countries, namely to Lubumbashi, Ndola and Lusaka. We met with mining managers and procurement specialists to validate the cost split that underlies our procurement demand model. Getting these numbers right is crucial to correctly estimate the spend that can ideally be localized in the various categories, starting with energy as the largest item, followed by fuel and lubricants, spare parts and opex equipment, sulphur and sulphuric acid, and equipment and plant maintenance and repair. The categories with the lowest volume are telecommunications and cyanide.

Localization strategies and local content policies are hotly debated in both countries at the moment. The DRC has passed a law on local procurement (External link), and Zambia is keen on leveraging the resource sector to industrialize as part of its 2030 strategy. Policymakers in both countries count on the sector to deliver development for its people. The DRC has passed a new mining code in February including new taxes, and Zambia is also debating new taxes to curb its debt burden (External link). Striking the right balance is crucial, not only for potential local content measures but also sector policy more broadly. “When the mine smiles, the miners smile” a senior mining official tells us.

For further information please contact Jakob Eckert.
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