Zambia eyes centre stage

The economic potential of the African hinterlands is undeniable. Transportation to the coast, however, is a costly add-on. Easier logistics, partnerships and filling containers both ways is Maersk Line’s way to ease the burden, moving landlocked countries away from the periphery.

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Copper mining has a tremendous social impact in Zambia. According to some estimates, there are twelve dependents per person employed in this industry. The Kankola Copper Mines employ around sixteen thousand people.

Copper, the metal, is used in such a wide range of industries that its price has become as an indicator of overall economic health.

Therefore, the decreasing copper price from the peak in 2011 is something that in the eyes of financial ­analysts translates into lower ­industrial demand, less economic growth and raised eyebrows. For Zambia, where copper is the backbone of the economy, the decline means a slowdown and hard times.

“Zambia is copper, and copper is Zambia,” says Bruce Marshall, Maersk Line’s Country Manager for the Hinterland Territories of Zambia, Zimbabwe and Malawi.

“While the situation is quite severe, prices have always fluctuated like this. We believe the prices will recover, but the question is when it will happen. Meanwhile, we can collaborate with our customers and partners to make our joint logistics more efficient,” he says.

Far from a port

In 2013, Zambia’s 760,000 tonne production of copper was second only to the Democratic Republic of the Congo in Africa, and accounted for roughly three quarters of the country’s export base.

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Follow the road of the Zambian copper 3:38

Maersk Line, whose vessels play a huge role in supporting the development of economies on the African continent, bridges the hinterlands with the coast through partnerships with rail and truck operators, thereby utilising inland corridors. For example, Maersk Line has partnered with Manica, a logistics service provider, and Grindrod, a railway operator in providing service to Konkola Copper Mines (KCM), one of Zambia’s four major copper producers with its 140,000 tonne annual output.

“Our collaboration with Maersk is important in terms of finding solutions for getting our product to our customers in a cost-effective manner. There’s no question that rail is going to be an important part of the future economic development story in Africa,” says David Patterson, Vice President of Local Economic Development at KCM.

For KCM, the opportunities and challenges are clear:

“Globalisation presents opportunities for countries that in the past were on the outer periphery of the global economy. A landlocked country like Zambia can now sell its products to the largest sources of economic growth in the world, so it’s a great opportunity for a broader economic growth story,” says David Patterson.

“However, many of our customers are in China, so we need to move our product halfway around the world, travelling some 2,500 kilometres to the coast before we can put it on a ship. This challenge is significant,” he says.

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Connectivity allows countries in remote locations to develop their economy and to sell to the rest of the world. “For Zambia, this represents both an economic opportunity and an opportunity for growth that perhaps haven’t even been envisaged today”, says David Patterson of the Konkola Copper Mine.

Africa’s transportation challenges cannot be solved by any one group on its own. A mining company cannot build a railway to the coast and a shipping company cannot build a railway in the opposite direction. Instead, solutions that improve the infrastructure, which according to the World Bank could add more than 2% to the annual GDP growth of the nations in question, require collaboration between industry players, transportation providers, governments and communities.

Bridging the gap

As much as 85% of the cost of importing or exporting a container into/from Zambia from/to Asia is connected to transporting it across the hinterlands.

“We are working hard to round-trip our containers, working with customers through supply-chain reviews to try and unlock more round-tripping opportunities. This helps to improve our cost picture, making servicing the inland locations more profitable,” says Bruce Marshall.

In spite of some diversification within Zambia’s export base in recent years, copper production and prices still dictate the pulse of this Central African country, home to the mineral-rich Copperbelt where major copper deposits were discovered in 1895.

In general, analysts are optimistic that the market for copper will rebound in the years ahead, but they disagree on how strong that turnaround will be, and, as Bruce Marshall points out, when it will happen.