Zambia Chambishi Metals Uses Congo Ores To Cut Costs-Officia

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Zambia Chambishi Metals Uses Congo Ores To Cut Costs-Official
Fri. November 27, 2009; Posted: 03:30 AM
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Nov 27, 2009 (Dow Jones Commodities News via Comtex) -- ZAMBY | Quote | Chart | News | PowerRating -- e>-By Nicholas Bariyo Special to DOW JONES NEWSWIRES

Zambia's largest cobalt smelter, Chambishi Metals PLC has refused to process locally mined mineral ores because of the higher production costs, a company official said Friday.

Instead of taking minerals from the Nkana Slug dump on the Copper Belt it is sourcing supplies from neighboring Congo's Katanga province, an official with Zambia's state mining body, Zambia Consolidated Copper Mines investments Holdings or ZCCM-IH said.

"The plant is not using any local materials now," he told Dow Jones Newswires on the telephone from Lusaka, the Zambian capital.

Officials say that ore grades in Zambia are low which increase costs of production. The plant continues to source higher grade ores from Katanga in a bid to keep its operations afloat.

Chambishi Metals, which has the capacity to produce up to 4,000 metric tons of cobalt a year is owned by U.K.-based Enya Holdings, ZCCM-IH holds a minority stake in the plant.

The smelter resumed output this month following its closure last December when global metal prices dropped to a four-year low.

The move has been criticized by Miners Union of Zambia president Rayford Mbulu who says that relying on imported minerals will cost Zambians jobs and revenue. Before its closure, the plant used to employ around 700 miners, since its reopening it has taken on 300 workers.

Derek Webbstock, the plant's chief executive officer was quoted by local media early this week as saying that management is only producing cobalt from the leaching circuit, which does not use electricity in order to cut costs.

He added that the plant would ramp up operations to full output once global cobalt prices reach around $22 a pound.