Zambia Mines Unable to Take 29% Power-Price Raise, Chamber Says

Apr 03, 2014 10:57 am ET

April 3 (Bloomberg) -- Zambia’s Chamber of Mines said operators in the country won’t be able to absorb higher power prices and asked the southern African nation’s energy regulator to review a decision to raise tariffs.

Africa’s biggest copper producer after the Democratic Republic of Congo raised electricity prices for mines by about 29 percent starting yesterday, the Energy Regulation Board said in an e-mailed statement.

There had been a “general outcry that mines should pay economic tariffs in accordance with the burden they impose on the system,” Chairman George Chabwera said.

Zambia’s mines use about 68 percent of the country’s electricity while less than a quarter of the population has access, according to Copperbelt Energy Corp. Hydropower accounts for more than 90 percent of the nation’s supplies, according to the company, which buys from state-owned Zesco Ltd. and sells to companies including the local units of Vedanta Resources Plc and Glencore Xstrata Plc.

“It’s just a double whammy,” Emmanuel Mutati, president at the Chamber of Mines, said of the tariff increase coupled with copper prices that have fallen 9.8 percent this year. Power accounts for about 15 percent of total mining costs in the country, he said today by mobile phone from Kitwe.

The price increase to a new minimum of $0.0684 a kilowatt- hour from an average $0.0531 before “is not sustainable at all,” the industry group said in an e-mailed statement today.

“The chamber strongly appeals to the Energy Regulation Board to review its decision to increase tariffs to the mining sector as this will exert excessive pressure on the mining companies,” it said.