Zambia’s largest mining companies are turning to an unexpected power source as the copper-producing nation faces an unprecedented energy crisis: South African utility Eskom Holdings SOC Ltd., which only recently overcame its own severe electricity shortages.
A historic drought has severely impacted the hydropower generation that supplies about 85% of Zambia’s electricity. Households are now receiving power for only three hours a day. As a result, companies like First Quantum Minerals Ltd. are looking beyond national borders for electricity to keep their mines and smelters operational.
Uninterrupted supply
The shortfall has proven worse than anticipated just weeks ago. Zambia is nearing the point of running out of water for generation at Kariba, the world’s largest man-made reservoir, which could completely shut down for the first time. Additionally, maintenance at the country’s only coal-fired plant has intensified the crisis, creating further risks for mine operators in the coming months.
“Power imports from Eskom that were not previously included in our projections are helping to mitigate the impact of this decrease,” said Anthony Mukutuma, a director at First Quantum’s Zambian unit. “We expect the power supply to our operations to remain uninterrupted.”
Eskom’s transmission unit has been supplying Zambia with 250 megawatts of power since August, equivalent to more than 10% of Zambia’s typical national demand. Plans are in place to double this supply within a month, aided by a regional electricity trading company called Africa GreenCo, according to CEO Ana Hajduka.
This shift is largely due to the Zambian government’s new regulations allowing open access to power transmission lines, enabling customers like mines to procure energy from companies like Africa GreenCo. Previously, the state-owned Zesco Ltd. held a monopoly over the grid.
First Quantum accounts for nearly half of Zambia’s copper production and operates Africa’s largest nickel mine. The mining sector typically constitutes about half of the country’s power demand. While Zambia’s normal generation capacity stands at around 3,777 megawatts, current production has dropped to only 1,019 megawatts.
Emergency restrictions
The government is working to protect the mining industry, which generates approximately 70% of the country’s export earnings. However, Zesco has informed mines that 40% of their regular supply is subject to emergency restrictions, forcing operators to source more expensive power from the region to fill the gap.
Some relief may be on the horizon. The government anticipates that most of Zambia will experience normal to above-average rainfall, with thunderstorms expected to start in October in the western region that feeds into Kariba.
The La Niña weather phenomenon, predicted to begin by the end of the year, may bring increased rainfall to Zambia’s hydropower dams. However, it takes time for the rainwater to reach the reservoirs, with Kariba’s levels typically rising from January or February onward. Years of good rainfall are necessary to refill the reservoirs.
Additionally, a new gas-fired power plant in neighboring Mozambique is expected to add about 450 megawatts to the regional grid by early 2025.
Despite these imports, Zesco anticipates a continued deficit for the remainder of 2024, which will impact Zambia’s economic growth, previously estimated to slow to 2.3% this year.
