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Zambia is a copper-rich African country that just three years ago was the darling of international investors seeking to expand their mineral portfolios. Mining investment - encouraged by privatization of the copper mines in the late 1990s - and the copper price boom that started in late 2008 served to support the sustained economic growth the  country had achieved since implementing measures in 2004  to  support greater fiscal discipline. Leading multinational mining companies, including Barrick Gold Corp., First Quantum Minerals Ltd. and Glencore PLC, have become major investors in Zambia's mining industry. 

Zambia's fortunes have turned, putting it on the path to become the newest "resource curse" story as its economy suffers from the perils of over-dependence on a single commodity and a handful of multinational mining companies. The copper boom is over (at least for now), Glencore has fallen into a cost-cutting crisis, Zambian mines are being shuttered, and the country's currency was the world's worst-performing currency last year. The economic strength of the country's mining industry has also been exacerbated by the Zambian government’s efforts to increase mining royalties, which led to threats of closure and postponed investment by several major mining companies.

  • Copper prices have weakened by more than 20 percent during the past year, mostly because of softer demand from China, Zambia’s biggest trading partner. China sources nearly 45 percent of its copper  - including refined and unrefined - from Zambia.
  • Zambia's currency, the kwacha, has lost about 50 percent of its value against the US dollar during the past year, fueling higher prices on imported goods.
  • Glencore, a multinational commodity trading and mining company headquartered in Switzerland, is among the companies that have cut back drastically in Zambia in recent months, suspending operations at its Mopani copper mine and announcing plans to lay off 3,800 workers at the mine. A Chinese-owned mining company, CNMC Luanshya Copper Mines, put 1,600 workers on forced leave at its Baluba mine, while another Zambian mine, owned by London-listed Vedanta Resources PLC, put 133 employees on forced paid leave because of the problems in the global copper industry.

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Sub-Saharan Africa

Source: IMF World Economic Outlook

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