Mining sectors take a hit
The mining sectors in Zambia and DR Congo have taken a severe hit following the decision of the international mining company Glencore to suspend its mining operations at its Mopani Copper Mines venture in Zambia and Katanga Mining venture in DR Congo for 18 months starting September 2015. Miners in both countries face regulatory uncertainty, high production costs and prices which have fallen considerably over the past twelve months in response to abundant global supplies and weakening demand. Glencore is a major player in these mining sector dependant economies and its decision together with low prices will reduce export earnings and fiscal revenues significantly, add to currency volatility and depreciation and complicate trade and investment dealings with these countries. Other miners could follow suit and exacerbate the problems facing Zambia and DR Congo, which includes a scramble for foreign currency and much greater pricing of local goods and services in US dollars to avoid exchange rate losses on imported supplies. Understandably, many traders will become increasingly concerned about the ability of local public and private sector partners to fund transactions.