Zambia urges mining firms to keep operating

By Shapi Shacinda

LUSAKA, Dec 29 (Reuters) - Zambia has asked foreign mining firms to use profits they made when copper prices were high to keep working in the downturn, its central bank chief said on Monday after Luanshya Copper Mine (LCM) suspended operations.

Bank of Zambia (BoZ) governor Caleb Fundanga expressed optimism that copper prices would soon rebound but said the developments at LCM were a threat to the country's copper industry.

LCM shut down its Chambishi Metals Plc unit, the country's largest cobalt producer, and the Baluba copper mine soon after suspending the $354 million Mulyashi copper project, which had been due to start producing 60,000 tonnes of copper in 2010.

It cited operational difficulties arising from the global credit crunch as reasons for the decision.

"The fact that there has been a low copper demand and prices have seen a downward trend is a development with lots of implications. However, (mining firms) must be able to weather the storm, it's a bit too early to leave (and) it's not too good to leave in a rush," Fundanga told Reuters.