FQM Agrees To Pay New Electricity Tariff, Power Deal sealed with ZESCO

Power transmission lines on the Copperbelt & North Western

State owned power utility, the Zambia Electricity Supply Corporation (ZESCO) and First Quantum Minerals (FQM) have concluded a high-level deal on electricity supply and migration to the new power tariff structure.

ZESCO and FQM have agreed that all FQM Operated Mines will be deemed to have migrated to the new tariff structure with effect from January, 2017 and that ZESCO, will put in place measures to ensure continuous, stable and full supply of power to FQM Operated Mines, including importation of power from alternative suppliers.

In a media statement made available to ZBT by the Ministry of Finance, the deal also resolved that Power supply be normalized to all the FQM Operated Mines. FQM operated mines are Kansenshi Mine in Solwezi and Trident Kalumbila mines, both in North Western Province. FQM is currently the largest Copper miner in Zambia.

The state owned ZESCO negotiated team composed of Managing Director Victor Mundende was boasted by Minister of Finance, Felix Mutati and Energy Minister David Mabumba while the FQM team was represented by Matt Pascal, Director of Operations, Hannes Meyer – Chief Financial Officer, and John Dean – Commercial Manager.

The Glencore owned Mopani Copper Mine (MCM), another large copper miner in Zambia with mines at Nkana-Kitwe and Mufulira has decided to challenge the new tariffs in court and obtained an injunction against the Copperbelt Energy Corporation (CEC), a privately held Energy company which distributes power sourced from ZESCO.

Over 55% of all power generated in Zambia is used up in the mining industry with domestic users accounting for about 27%. The upward tariff adjustment for domestic users for the initial 50% has already been implemented with the next 25% to be implemented from September 2017.

But its been debated that it’s the large industrial and mining users that need to migrate to new tariffs that are expected to lead to a complete drop in electricity subsidies by the government as well as attract the needed investment in additional power generation capacity locally. ZESCO has also been challenged to announce efficiency and cost cutting measures for its operations to ensure that both domestic and industrial power consumers are not made to finance the company innefficiencies.