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MCM hailed government for waiving windfall tax
Mopani Copper Mine, a unit of Glencore AG International, leading commodity trader hailed government for waiving windfall tax which was retrogressive to its profitability in the mining industry.
Mr Emmanuel Mutati CEO of MCM said that government did well to remove the windfall tax because it had a negative effect on the profits of mining companies. The windfall tax, as envisioned by most economic players to sustain Zambia’s social sector and help rebuild mining towns where foreign companies operate with an annual return of USD 415 million affected Mopani in that the miner did not make any profits after its introduction in 2008 under the Mines and Minerals Act.
He told mines minister Mr Maxwell Mwale that Mopani was pleased that the windfall tax had gone and the company looked forward to making profit and recapitalize its operations in Zambia adding that there are plans to plough one billion United States dollars in the operations at Nkana mines, to increase productivity.
According to Mr Mutati, the 68 year old mine is expected to start treating about 720,000 tonnes of concentrate by the year 2013.works are underway to develop a shaft that will give the mine another 25 years of operations. There are plans by Mopani Copper Mines, a jointly owned by Glencore AG International and First Quantum Minerals may spend about USD 295 million to sink a new shaft at its Nkana mine site in Kitwe and increase the life span of the project in Zambia’s rich copper region to 25 years.
According to Mutati, the synclinorium shaft will have a production capacity of 115 million tonnes of copper ore. Mopani Copper Mines plans to invest an additional USD 1 billion in the next 5 years to increase production of the metal. He said that the investors earmarked USUSD 295 million to sink a new shaft at Nkana site to prolong the lifespan of the mine. Presently, some preliminary works are underway on the project and that next year actual works will commence with the project being commissioned in the Q1 2015.
The lifespan of the shaft is 25 years and preliminary works have already started. The Nkana mine site would have been closed by 2015 without the sinking of the new shaft adding that the new shaft will be 1200 meters deep and 600 people will be employed. MCM has so far invested USD 1.2 billion in the mine since it was privatized. The lifespan for the Nkana north shaft in Kitwe will expire in the next three years. Although operations at its north shaft mine at Nkana mine is expected to expire in 3 years time, this development is unlikely to affect Mopani’s operations as it merely produces 500,000 tonnes of ore per annum.
Mr Maxwell Mwale mines minister of Zambia said that the Zambian government is elated at Mopani Copper Miner appointing more Zambians in management positions with Mr Mutati, a qualified mining engineer, being the Chief executive officer. Last year Mopani Copper Mine stated its plans to spend USD 100 million to sink a new shaft and extend the mine life by 25 years. The planned development of the new shaft was intended by the owners to access untapped mineral resource of about 100 million tonnes of copper bearing ore beneath the existing Nkana south ore body and the central shaft ore body in Kitwe.
Mr Mwale noted that the ore bodies currently being mined were nearing their end and the existing shaft infrastructure cannot go deeper for them to access the rich ore body. It was not possible to mine the ore for another 25 years once they access the ore body beneath unless another shaft was sunk.
Mr Rayford Mbulu president of Zambia’s miners union MUZ said that the mine management had informed the union work on the new shaft was planned to start last year. Apart from the new shaft, there were plans to start building an open pit mine in 2010 and enable the mine to have a lifespan of about 18 to 20 years. The open pit mine would be developed in the Mindolo ore body, one of Zambia's oldest mining sites which together with the Mufulira copper mine and Mufulira smelter are operated by Mopani.Mopani Copper Mines owns Mufulira Copper Mines and Nkana units.
Owners, Glencore AG International of Switzerland and Australian and Toronto listed First Quantum, jointly own more than 70% with ZCCM IH owning the rest of the equity. In a related development, former AMICO compound landlords in Kitwe in copperbelt region of Zambia have appealed to government to intervene in the demolition wrangle and secure compensation after Mopani Copper Mines razed their houses to pave way for mining activities in Kitwe.
Mopani claimed that it sought to demolish the structures on account that their houses were too close to mining activities. The residents whose houses were demolished in 2000, argued that the ZMK 2 million compensation was not enough to sustain them. They contend that management had promised to relocate them to better places with new housing structures which have not been honoured. The program was premised that Mopani would collaborate with the World Bank, Mopani Copper Mines and government. And on top of that they were supposed to build houses for us but later on that money changed into compensation. They told us that the rental loss was compensation enough.