• Significant Shift to Aluminium: Q1 results show a 74% surge highlighting a strategic pivot to mitigate the cost pressures from rising copper prices
  •  Trade-Offs in Performance: While aluminum offers a cheaper and more stable alternative, its lower conductivity requires thicker cables
  • External Challenges and Opportunities: Faces systemic issues, including counterfeit imports

 

Global price of Copper, US$/ Metric Ton

                               

International Monetary Fund, Equity Axis Research

Harare-The surge in global copper prices, while often interpreted as a positive indicator for mining-heavy economies, presents a significant cost burden for manufacturers like CAFCA, which rely heavily on copper for cable production.

Copper’s status as a critical raw material means its price volatility directly inflates production costs, squeezing margins in an already hyper-competitive market. In response, CAFCA has increasingly turned to aluminum, a cheaper, lighter alternative to mitigate these cost pressures.

This strategic shift is evident in the company’s Q1 results, where aluminum volumes surged by 74% year-on-year, dwarfing the 13% growth in copper-based products. While this substitution has allowed CAFCA to maintain volume growth and partially offset copper-related cost inflation, it introduces new complexities. 

The Aluminum Trade-Off: Balancing Cost and Performance

Global price of Aluminum, US$/Metric Ton

                     

International Monetary Fund, Equity Axis Research

Aluminum’s lower cost and abundance make it an attractive alternative, particularly for utilities and commercial projects where weight and budget constraints are critical.

The 187% growth in utilities volumes reflects aluminum’s adoption in large-scale infrastructure projects. Aluminium is abundantly available and offers a cheaper alternative to copper for conductors.

The demand for copper is variable and the price fluctuates considerably whereas the price of aluminium is much more stable.

However, aluminum is not a perfect substitute. It has lower conductivity than copper, requiring thicker cables to achieve similar performance a limitation that may affect long-term product competitiveness in precision-driven applications.

Furthermore, transitioning production lines to accommodate aluminum involves retooling costs and technical adjustments, which could strain operational efficiency in the short term. 

Despite the pivot to aluminum, copper remains irreplaceable in high-performance sectors such as industrial machinery and premium retail electrical products. With copper prices trending upward, CAFCA’s 13% growth in copper-based volumes likely came at the expense of thinner margins, as the company absorbed higher input costs while facing pricing resistance from customers.

This dynamic is exacerbated by Zimbabwe’s currency instability, which complicates cost pass-through strategies.

For context, global copper prices rose by approximately 18% in 2023–24, driven by supply chain bottlenecks and green energy demand, but CAFCA’s ability to fully offset this through pricing was hamstrung by informal competitors and counterfeit products flooding the retail space. 

Globally, companies like Nexans (Europe) and Prysmian Group (Italy) have similarly diversified into aluminum and invested in R&D to improve its efficiency. However, CAFCA’s operational context marked by erratic power supply and currency distortions demands unique solutions.

Here, AI could play a transformative role. Machine learning algorithms could optimize raw material procurement by predicting copper price trends and automating bulk purchases during dips. AI-driven production systems might also enhance flexibility, enabling faster switches between copper and aluminum lines based on real-time cost-benefit analyses.

Additionally, AI-powered quality control tools could help differentiate CAFCA’s products from counterfeits, reinforcing brand trust in a saturated market. 

Government Policy: The Missing Link

While CAFCA’s operational adjustments are commendable, systemic risks persist. The government’s failure to curb counterfeit imports undermines formal retailers, as seen in the 25% decline in CAFCA’s retail volumes.

Moreover, incoherent currency policies amplify copper’s cost volatility. For instance, surrender requirements force CAFCA to liquidate foreign currency earnings at unfavourable exchange rates, eroding profits from exports, which fell by 39%. A coordinated effort to stabilize the ZiG, coupled with stricter quality controls on electrical imports, would create a more predictable environment for manufacturers. 

Therefore, CAFCA’s Q1 performance highlights a precarious balancing act: leveraging aluminum to counter copper-driven cost inflation while overcoming the technical and market limitations of this substitution. The company’s 29% revenue growth signals elasticity, but margin pressures reveal the fragility of this progress.

To sustain growth, CAFCA must couple operational agility with technological innovation, embracing AI not just for efficiency, but as a strategic differentiator.

Meanwhile, government action on currency stability and counterfeit enforcement remains critical to levelling a playing field increasingly skewed against formal manufacturers. In a world where copper prices show no sign of retreating, CAFCA’s adaptability will be tested like never before.

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