Zambia’s copper output increases as country defaults on foreign debt

This comes as good news to Zambia, which skipped a $42.5 million interest payment on part of its international debt last week, becoming Africa’s first bond default during the coronavirus pandemic. 

President Edgar Lungu’s government, which is battling for re-election next year, has blamed covid-19 for problems managing the country’s $12 billion of debt.

While it seeks a compromise with bondholders, the government has announced it has no plans to sell its shares in mining companies it has stakes in to raise cash.

Zambia’s mining assets have been in the spotlight as the country’s financial situation deteriorated this year and the pandemic prompted Glencore (LON: GLEN), one of the biggest miners operating in the country, to shut its Mopani Copper Mines (MCM).

The move angered the government, which threatened to revoke Mopani’s mining licenses and temporarily blocked its chief executive officer Nathan Bullock from leaving the country. 

Glencore reacted by putting its 73.1% stake in the operation on the table, hoping to reach a deal with authorities.

Zambia said earlier this week that negotiations with Glencore about increasing the government’s stake in Mopani were nearing a conclusion, although no information about the size of the stake that state-owned ZCCM Investments Holdings is trying to acquire was given.

The government is also in arbitration over mining assets it seized last year from billionaire Anil Agarwal’s Vedanta Resources Ltd.

Other copper miners have halted $2 billion of planned investments because of a dispute over royalty taxes.

Zambia has promised to address the issue at a mining conference later this year.