ARM, Vale may spend $500m to double Konkola

[LesCrozes]

ARM, Vale may spend $500m to double Konkola
David McKay | Mon, 27 Feb 2012 14:28

[miningmx.com] – AFRICAN Rainbow Minerals (ARM) said it would have spent $6.5bn (R50bn) in 10 years by 2014 in capital projects, and that it had earmarked $500m to more than double production at its Zambia copperbelt project, Konkola with its joint venture partner, Vale.
“It’s only a thumbsuck but I suspect we could spend R50bn in partnership with our partners on growth projects,” said Patrice Motsepe, executive chairman of ARM at the group's half-year results ended December in which it posted a 24% increase in headline earnings to R1.94bn.
“It’s a rough number but the growth is imperative.” Some R9.9bn would be spent on capital expenditure between 2012 and 2014. A further R8.9bn would be spent by ARM’s partners over the same period.
Already, some 80% of capital allocated to the $400m development of Konkola North had been spent and production was likely from December. a further $500m could be deployed to expand the project, however.
In an interview after the results briefing, Andre Wilkens, the outgoing CEO of ARM, said copper production from Konkola's 'Area A', which is south of current operations at Konkola North, could see the mine produce at least 100,000 tonnes annually of copper from the current 45,000 tonnes/year that is planned at Konkola North.
"A year from now we could make a decision and start moving," said Wilkens on the possibility of sinking a 1.2km vertical shaft into Area A's orebody which he described as flat and twice the grade of current operations. "We could go to 100,000 tonnes/year or slightly better," Wilkens added. "There is no doubt that we will mine there. We're extremely exicted about Area A," he said.
ARM was also "putting machines" on additional exploration properties in Zambia for which ARM expected to be awarded exploration licenses shortly.

NATIONALISATION
In a growth-focused, outward looking introduction to ARM's interim results, Motsepe said that many of the political issues that had dogged the South African mining sector over the past few years were now over. He was partly referring to calls by the ANC Youth League for nationalisation of the mining industry – a issue that Motsepe initially tacitly supported.
Motsepe has since distanced himself from nationalisation and said on Monday: “We’ve always said that nationalisation is not an option”. However, he said it had been necessary to give nationalization an airing because he "believed in democracy".
"You don't influence people by telling them to shut up," said Motsepe who added that his view on considering nationalisation at the time was because current mining policies were not working for the majority of the people.
Commenting on current proposals by an ANC commissioned study into state intervention in the mining industry, which has recommended a reorganisation of the tax regime for the industry, Motsepe said that it worried him.
"What worries me about the ANC document is the tax issue. It is not good for mining. If you have mining taxation that is excessive it will negatively affect the industry," he said.