Zambia miners say fuel price hike may dent output

LUSAKA (Reuters) – Zambia’s increase of fuel prices by more than 11 percent at the weekend will significantly raise production costs and affect output in Africa’s top copper producer, the chamber of mines said on Monday.

Zambia increased the price of fuel by more than 11 percent on Saturday due to rising global crude oil prices, the country’s energy regulator said.

In May last year, Zambia raised the price of fuel by an average 13 percent and there was another increase of 15 percent in January 2010 due to rising global oil prices.

“Any increase in the cost of fuel is an increase in costs and this has a bearing on production,” Frederick Bantubonse, the general manager of the chamber of mines of Zambia, told Reuters.

Copper production in Zambia is likely to rise to 850,000 tonnes in 2011 from just below 750,000 tonnes last year due to expansion of some of the country’s mines, the mining minister said last week.

Analysts said the fuel price increase would also make it difficult for Zambia to attain its target of 7 percent inflation by the end of 2011.

“The price increase will obviously lead to higher inflation as the costs are passed on to consumers,” said Chibamba Kanyama, a member of the Economics Association of Zambia.

Kanyama said in an interview with Reuters manufacturers who could not pass the costs to consumers would scale down on their output and lay off some people.

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