Mopani invests heavily in lifespan extension

 

Lusaka – Mopani Copper Mines, one of Zambia’s leading producers of copper and cobalt, has revealed a breakthrough in the construction of its Synclinorium shaft at its Nkana mine. It has so far sunk to a depth of 1 000 metres. A paltry 277m remains for the shaft to reach the targeted depth of 1 277m. The shaft will increase the lifespan of the company by over 25 years.

The company has announced plans to invest US$323 million on the Synclinorium shaft and create about 3 000 jobs. The Synclinorium shaft is expected to be commissioned in 2015.

The shaft would extend the lifespan of Nkana mine beyond the current expected depletion dates of the existing reserves at Mindola North, South Ore Body (SOB) and Central shafts, according to the company’s projections. Company chief executive officer, Danny Callow, said that management was encouraged that the project was on target both in terms of time and in terms of budget but cautioned that long-term projects like the Synclinorium shaft could be unpredictable.

But Callow guaranteed that the project will be delivered on time and within the budget in the second quarter of 2015, in readiness for commencement of ore hoisting. Apart from securing the existing jobs, Mopani will access some 115 million tonnes of ore at a grade of 1.9 percent copper and 0.09 percent cobalt. Callow added that sinking a shaft is a highly technical undertaking and to maintain such a good safety record with zero fatalities is a great achievement.

“For us, safety is the number one priority and, therefore, I would like to commend the project team for establishing a safe working environment for all employees. I am determined to ensure that this remains the case up to the very end of the project,” Callow stated.

Meanwhile, the company seeks to invest an additional US$1.3 billion in world-class operating assets at Mufulira and Nkana mines whose lifespan will be extended by 25 years, said Callow, adding that additional capital would be injected into its operations between 2013 and 2017. During a recent African Copper Conference in Lusaka, Callow revealed Mopani Copper Mines plans to invest in operating assets and extension of the mine life by at least 25 years.

With an additional investment, Mopani expects to create many job opportunities in the construction phase, with increased ore production and subsequent cathode outturn reaching 1.4 tonnes. According to data, current Mopani resources at Nkana and Mufulira have in excess of 20 years, although the existing infrastructure is not economically viable, noted Callow.

He said the mining company would replace existing shaft systems with modern, world-class assets with additional two 2 000-metre deep shaft systems to complement the Synclinorium Project, world-class concentrator to replace Nkana concentrator of 1934 and further close inefficient shaft systems as soon as possible.

The project was expected to cost the mining company US$800 million over three-and-a-half years. The project will increase hoisting capacity from the current six tonnes to 11 tonnes per annum and potential increase in copper output by 50 percent, Callow added.

It is envisaged the project would further give the mining company an opportunity to expand smelting capacity to meet concentrate demand and increase economic life by 20 years. 

Callow stated, however, that mining taxes represented 75 percent of total government tax collections by 2012, which reflects the exhaustion of capital allowances, increased mining production and higher fiscal rates implemented since 2008.

Meanwhile, copper production at Zambia’s largest copper producing mine is under threat, as stockpiles of unprocessed concentrate rise due to inadequate treatment facilities in the country, says a company official.

Kansanshi Copper Mines spokesperson, Godfrey Msiska, says Kansanshi, a unit of First Quantum Minerals (FQM), has stockpiled about 75 000 tonnes of unprocessed copper concentrate worth around US$133 million, which it cannot export due to the 10 percent levy introduced last year on unprocessed mineral exports.

“The stockpiles are jamming our operations and yet the local smelting capacity is not sufficient,” Msiska told Dow Jones news wires, adding that the company was seeking a Government tax waiver to export the stockpiles.

The rising stockpiles are overwhelming the company’s storage facilities and this could soon inhibit production. A government official at the Ministry of Mines has said talks over incentives and tax waivers were in progress, but cautioned mining firms not to expect many concessions. “The mining companies are still making profits despite reduced prices,” the official said.

Zambia imposed a levy on export of unprocessed concentrate to encourage local value addition and restrict unprocessed minerals leaving the continent Africa, as resource-rich countries seek to benefit more from natural resources.

Kansanshi transports its concentrates for treatment at Vedanta Resources-Nchanga Smelter and the Chinese-owned Chambishi Copper Smelter, both on the Copperbelt, about 160 kilometres away. About 60 percent of the company’s copper output is in concentrate form, requiring smelting and refining to produce cathodes.

FQM is building a US$500 million copper smelter as it seeks to end its reliance on Copperbelt smelters, which are increasingly coming under pressure due to rising copper production across the country. Zambian miners continue to be battered by low global copper prices, which have been weighed down by concerns over Chinese demand and higher global production.

FQM is also developing the US$2 billion Sentinel copper project in Zambia. Last month the company said its expansion projects in Zambia would come on stream in the next 18 months. The projects are expected to create 2 400 more jobs and produce 445 000 tonnes of copper a year.

October 2013
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