COPPERBELT Energy Corporation (CEC) chief executive officer Owen Silavwe says the rise in the copper prices and rolling back of the COVID-19 pandemic provides an opportunity for an improvement in the mining business environment, which is expected to stimulate increased electricity demand.
In an interview, Silavwe expressed optimism that copper prices, which breached the US $8,000 per tonne threshold last month, would attract more mining sector investments, which would stimulate increased electricity demand as the New Year unfolds.
“With that, we obviously want to focus a lot more on the business, looking at both our markets, Zambia and the DRC and you are obviously pretty much aware that the copper price is currently on the right trajectory so there is expectation that the copper price is going to strengthen going through 2021 into 2022. That, obviously, should encourage the mines to get back to making investments; at the moment, there is very little investment that the mines are making into the mines. If the business environment improves, the COVID-19 situation starts rolling back, then we can expect that the mines will obviously look at beginning to reinvest and they obviously want to leverage the improving copper prices on the global market and that I think is reason to encourage us to deliver more power and in general also improve the networks,” Silavwe said.
He reflected on 2020 being a challenging year, but remained optimistic of a brighter economic outlook this year.
“2020 for CEC has basically been a mixed bag I should say. It’s one year where we had encountered more challenges than opportunities, particularly if I look at the Zambian market, it’s a year where maybe our investors had a big scare or the largest scare in terms of their investment in CEC and so it was very important for the company. But we worked through all the issues and tried and made sure that we keep the company afloat and spur the focus on the business. Because being a private sector entity, you obviously need the support of government and the regulator to be able to manage your business properly. It is important that you are provided an environment that makes some decisions yield the anticipated outcome, that is obviously quite key and so some of the challenges that came in the way of the business, obviously, were not necessarily helpful, particularly given the company is a listed business. However, we are obviously hopeful that that is behind us and we need to look to the future with a lot of positivity, hope and we need to remain determined and committed to our core values as a business,” he added.
“In terms of opportunities, obviously, the landscape continues to provide a number of opportunities and when we look at Zambia, just the fact that the country has got power shortages and you look at the electrification needs of this country, they are huge. When you look at where technology is heading, we talk about renewables, we talk about the advances in technology, which you can leverage to reduce the cost to the business, the opportunities there are huge and so we have continued on our path to grow in the area of renewables, we continue to leverage technology to reduce the cost and, of course, in doing all these things, you can’t do it alone, you need to partner, whether you are looking at other entities, looking at technology providers so we basically continue to do that. Working with all partners and if I actually include government, the regulators (Energy Regulation Board) themselves, there are quite a number of opportunities.”
He, however, conceded that not much growth was expected this year, but that the company would focus on CEC’s business fortunes.
“So, we are certainly looking to growth going into 2021, we don’t think it will be much growth, I think it’s more of turning the corner in terms of what we have been seeing happening in the business so that we can get on sort of a positive and one of the things that I am happy about, we are ending the year on point where the CEC stock on the Lusaka Stock Exchange is again beginning to improve in terms of (share) price. So, I am certainly hoping that that will continue in 2021 because that is the reason our investors want to invest in CEC, they are obviously hoping to benefit from capital gains as well as dividends as well so we are certainly looking at both improving the performance of the business in 2021; we will be quite focused on that, and we are also hoping that from the equity market perspective, CEC will perform well, better than it has in 2020. It had come under a lot of pressure this year (2020),” he recalled.
And Silavwe announced that the company was looking to invest in renewable sources of energy and small to medium hydro-electric power plants.
“We are quite focused to invest; when we are just looking at generation, our focus has been mostly, as I said, renewables, so if there are opportunities in those areas that are aligned with our core business, we are certainly quite happy to invest and we think going into next (this) year, we are going to continue with our investments in those areas; we obviously have to look at quality investments,” said Silavwe.
In addition to supplying power to mining companies on the Copperbelt, CEC is aggressively increasing its market presence in the DRC as demand for power from mining units in that country steadily grows.
The Kitwe-based power utility paid out a 2.1 US cents per share dividend to shareholders last month, driven by a significantly reduced level of impairment losses, which boosted profitability, despite a turbulent first-half period.
Its share price equally recovered significantly to end 2020 at K1.10 per share on the Lusaka Stock Exchange (LuSE) from a low of K0.80 per share by end of trading on June 25, 2020, in the aftermath of the lapsed Bulk Supply Agreement (BSA) with Zesco Limited last March.