Zambia has recorded a drop of 10.8% (about 11%) in copper exports resulting into a trade deficit of K516.8 million in June 2019, reversing some gains from a trade surplus of K501.1 million recorded in May 2019 indicating than the country imported more that it exported in nominal terms. Trade account balance has a direct impact on the forex reserves and the exchange rate.
Speaking during the release of the Central Statistical Office Monthly Bulleting in Lusaka on July 25 2019, CSO Acting Director Goodson Sinyenga disclosed that imports increased by 3.6 percent from K8, 215.4 Million in May 2019 to K8, 510.9 Million in June 2019. Zambia runs a willy nelly free market economy with limited to no market controls.
Sinyenga attributed the trade deficit to the increase in intermediate goods imports, which increased by 41.3% from K1, 546.3 million in May 2019 to K2, 184.2 million in June while exports decreased by 8.3% from K8, 716.5 million in May 2019 to K7, 994.2 million in June 2019 attributing the decrease in exports earnings from intermediate goods by 14.7%.
The Traditional Exports – TEs (mostly copper and mining related products) earning decreased by 13% from K6, 0057.8 million in May 2019 to K5, 2709 million in June 2019.
“In terms of share in total exports, TEs recorded an average of 67.7 percent in revenue earnings between June and May 2019 while Non-Traditional Exports earnings increased by 2.4% from K2,658.8 million in May 2019 to K2,723.3 million in June 2019 and in terms of share in total exports, NTEs recorded an average of 32.3 percent in revenue earnings between June and May 2019,” he stated.
The Acting Director has further announced that the volume of refined Copper exported in June 2019 decreased by 10.8% from 73,777.9 metric tonnes in May 2019 to 65,797.2 metric tonnes. He said the copper prices on LME market for the corresponding months decreased by 2.7% from $6,028 per metric tonne in May 2019 to $5,868.4 per metric tonne in June 2019.
“Since copper accounts for the largest weight proportion of traditional exports, any change in the volume and price or value has a direct bearing on the performance of the traditional exports,” he said.
Copper exports are further expected to be subdued after Konkola Copper Mines – KCM shareholder, the Zambia Consolidated Copper Mines investments holding company – ZCCM IH filed for liquidation of the interest of Indian miner Vedanta.
The Zambian Government has proceeded to invite new equity partners with more than 7 international companies already confirming having conducted due diligence with the intension of partnering with ZCCM IH as replacement for Vedanta.
