The Zambian people will head to the polls on August 13, 22.5 million strong and expected to return a government that has put the modernisation of its mining sector at the forefront of its agenda.
Hakainde Hichilema, known colloquially as Bally, put five election defeats behind him by claiming 59.02% of the vote in 2021’s run-off with incumbent Edgar Lungu.
Hichilema, a major cattle rancher and former CEO of Grant Thornton Zambia, has made the revival of the southern African country’s mining industry a major focus of his Presidency, drawing investment from both Chinese and North American sources.
It’s been expressed most starkly in the country’s stated target to become one of the world’s largest copper producers.
Zambia is running at around 640,000tpa and hosts the major Lumwana (Barrick), Kansanshi and Sentinel (both First Quantum) mines.
By early in the 2030s, the dream is to hit 3Mtpa.
Lofty ambitions, reflected in the announcement of the start of the US$2.2bn Mingomba project by Kobold Metals, a private mining firm whose backers include Bill Gates, Jeff Bezos and Sam Altman.
The high grade deposit is projected to produce around 300,000tpa, with US$600m to be spent in the country this year.
“This means more than jobs and community revival; it is about Zambia taking its rightful place globally in copper production,” Hichilema said at a recent shaft sinking ceremony.
That came after Zambia’s mines ministry said copper mad BHP, the world’s biggest miner, was looking to pursue large-scale copper exploration in the country, where it doesn’t currently operate.
Its investment attractiveness index score in the latest Fraser Institute Survey of mining companies rose from 28th place out of 82 jurisdictions to 25th out of 68.
Despite a recent row involving its outgoing ambassador, Zambia and its copper remains a key cog for the US in the Lobito Corridor, a State-backed transport route taking minerals to the Atlantic via the port of Lobito in Angola.
But it also sees strong investment flows from China, which holds billions in Zambian debt.
Stronger mining sector
The hope is that a big expansion in mining activity can help pay that down, as it wades through short term challenges in the form of a fuel and sulphuric acid crunch from the Iran War.
But participants in the country’s mining scene say measures have been taken to strengthen the industry at multiple levels.
One of those is uranium developer Atomic Eagle (ASX:AEU), which landed on the ASX last year with the purchase of Canada’s GoviEx Uranium.
It owns the Muntanga project, close to Zambia’s southern border with Zimbabwe, which hosts a measured and indicated resource of 50.4Mt at 359ppm U3O8 for 40Mlb of yellowcake.
Outside that is an inferred resource of 12.8Mt at 263ppm for 7.4Mlb U3O8 and an exploration target of 82-150Mt at 150-350ppm U3O8 for 40-100.5Mlb of uranium oxide.
While Zambia is better known for its copper bounty, those grades compare favourably to similar deposits in nearby Namibia, one of the world’s top uranium producing nations.
CEO Phil Hoskins says Atomic Eagle has already benefitted from the policy platform of Hichilema’s centre-right United Party for National Development.
“(Hichilema is) educated in economics and the need for political stability to attract investment and has quite aggressive targets on copper production and an understanding that the existing mines aren’t going to be sufficient to meet those targets,” Hoskins said.
“So they’re going to need to incentivise exploration and development stage companies.
“And in support of that they’re in the middle of flying a country-wide geophysical survey using a group called Excalibur and then a lot of that data will get made available to explorers, developers, producers in country to try and unlock a lot of the prospectivity that remains underexposed.”
That includes a survey method that will help Atomic Eagle identify prospective areas for uranium mineralisation.
“It is literally the entire country and typically, when I’ve seen these things before, I thought it was aeromagnetics, which identifies structures, which is good for a lot of commodities, but gold and the like especially,” Hoskins said.
“But to hear from the Geological Survey on this last trip that they’re also doing radiometrics – which is the radioactive measure that indicates whether there’s potential for uranium mineralisation as well – the fact that they’re doing that will be of great benefit to us.
“Not just across our existing 1100km2 land package, but also to identify other areas within the country that might be worth adding some ground and adding to the portfolio as we move forward.”
Uranium in vogue
Uranium prices may not have moved in the past year like gold, silver, tungsten, copper and lithium.
But the groundswell building behind the nuclear fuel is undeniable.
Added to the US Critical Minerals List last year, the world’s largest economies including the US and China have made commitments to radically expand their nuclear power sectors.
More than 75 reactors are being built, with another 120 planned.
It will move into a new phase of the nuclear demand market, which previously saw new capacity largely replace outmoded plants. In the past 20 years, 111 reactors were retired and 101 opened.
Utilities enjoyed weak prices for years after the Fukushima incident in 2011, which curbed demand for yellowcake. But the days of feasting on a weak spot market are over.
The market, with demand expected to double by 2040, is already in deficit.
Shaw and Partners this year turned heads with calls that spot prices – currently around US$85/lb – will climb to US$175/lb next year and peak at US$200/lb by 2028.
Zambia has ties both to the US and China in its business dealings, and Hoskins says the fact it and most of Africa has not ‘picked a geopolitical side’ will be advantageous when it comes to finding customers and securing funding.
China is already a big participant in the Namibian uranium sector, while the US and even now India have emerged as big backers of uranium mining.
“The world is our oyster,” Hoskins said.
“We already have been talking to the US. We know the Chinese will be very interested given the the rollout of their nuclear programme.
“Recently we saw India joining the party with some long-term supply deals with Cameco and Kazatomprom.
“So yeah, we think that Africa is a great place because you can service both the East and the West markets which will mean it’s quite a competitive environment when you come for those off-take and financing discussions.”
Growth plans
A previous feasibility study under the GoviEx banner outlined a project with a scale of around 2.2Mlbpa, but the goal is to make that bigger.
By taking it into the realm of 4-5Mlbpa, Muntanga will boast the scale to have real market relevance, akin to Paladin Energy’s (ASX:PDN) Langer Heinrich in Namibia.
AEU is currently running a 30,000m drill program to underpin a resource upgrade and larger scale development.
“The intention is to to go as large as possible to drive economies of scale so that our costs are as low as possible and our margins are as high as possible,” Hoskins said.
“So we’ll select that scale at the end of 2026. Hopefully we’ve had some success with the drilling and 2027 would be updating feasibility studies and I stress that word updating.
“We understand already from that feasibility study that was done, that it has presented a great platform.
“We understand that the recoveries are plus 90% through a very simple heap leach operation, the acid consumption is very low, which is a big driver of operating costs, and the mining is low strip.”
“The nearest technical analogy to this project is Bannerman Energy’s (ASX:BMN) Etango project, albeit our grade’s about 25% higher than theirs, but they also have excellent recoveries and low acid consumption.
“They’ve recently concluded a billion dollar transaction with a Chinese group – they’re the sorts of transactions that I believe will be on the table for us when we get to approaching them probably mid-2027.”
Having a government that understands mining and provides a stable operating environment is a big part of the equation, Hoskins noted.
“We have a very strong belief that Africa is a fantastic place to be developing a uranium project, and particularly a stable jurisdiction within Africa like Zambia,” he said.
Source: Stock Head