Vale SA seeks to partner with 3 mining companies in Zambia

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Vale SA seeks to partner with 3 mining companies in Zambia
Thursday, 30 Sep 2010
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Brazil’s leading miner, Vale SA Limited seeks to partner with 3 mining companies in Zambian to treat copper concentrates from its USD 380 million Konkola north mine when it starts operations in the next 3 years.

According to sources close to the ministry of mines, the Brazilian major miner together with its partner, African Rainbow Minerals Limited is in talks with Konkola Copper Mines, Mopani Copper Mine and Chinese owned NFC Africa Mining to secure copper treatment agreements when it starts operations in 2013.

Mr Maxwell Mwale mines minister of Zambia could not immediately be reached on the matter. However, sources within the ministry said that Vale SA and African Rainbow Minerals approached the three companies more than a month ago to try and secure an agreement and ensure all copper concentrates were treated within Zambia by the 3 companies which have smelters at their units in the country, Africa’s largest copper producer.

KCM, a unit of London listed Vedanta Resources owns the 300,000 tonnes per year Nchanga Smelter and a copper smelter. Mopani Copper Mine is jointly owned by Glencore International AG of Switzerland operates the Mufulira Smelter while NCFA is a unit of China Nonferrous Metals Company and owns the Chambishi Copper Smelter and Luanshya Copper mine.

Recently, Vale SA said that construction of the USD 400 million Konkola North project had started and that the mine was expected to begin production in 2013 and reach commercial levels by 2015. The company estimates Konkola North's nominal copper production capacity at 45,000 tonnes per year of copper in concentrate which will be smelted in Zambia.

In 2008, Zambia introduced 15% export levy on unprocessed copper concentrates to encourage companies to utilize Zambian smelters. Konkola North Copper Mines is expected to have a lifespan of at least 28 years including 3 year exploration program to evaluate area A, which has the potential to increase output to 100,000 tonnes a year of copper in concentrate from 2020.

Vale stated that it planned to employ at least 3,000 miners when it starts production while the company has contracted several Zambians to start developments ahead of the development. Vale's planned investment in Zambia was recently met with resistance by the miners unions over labour related matters in among other countries, Canada, a claim the Zambian government denied.

National Union of Miners and Allied Workers and Miners workers union of Zambia argued that they had not been consulted over the planned investment by Vale SA and Rainbow Resources Limited in Zambia including on labour policies.

Mr Maxwell Mwale said that the government expects Vale to respect the country's labor laws. He said that Vale is the second largest mining company in the world, the fact that it has just had problems at its Canadian unit doesn't mean that it should be prevented from investing in Zambia.