Chibuluma Mines plc – Copper
Chibuluma is situated in the heart of Northern Zambia’s copper belt, west of Kitwe, near the town of Kalulushi. Metorex acquired 85 per cent of the company in 1997, while the remaining 15 per cent is held by the Zambian Government and Zambia Consolidated Copper Mines Limited. It is an efficient operation with a high grade orebody and an estimated mine life of seven years. The mine produces approximately 16,000 tons of copper per annum.
SHEC report
Safety performance frequency rates
Frequency rates F2008 F2009
Non-lost time frequency rate 5,5 21,3
Lost time injury frequency rate 6,0 4,0
Total recordable injury frequency rate 11,5 25,3
Reportable injury frequency rate 6,6 0,9
Serious injury frequency rate 3,3 0,9
Lost day severity rate 618* 18,7
Fatality frequency rate 0,6 –
* Includes 1000 shifts for the fatality in 2008
Safety and health
A substantial improvement in safety performance was achieved in the fatality, reportable and serious injury frequency rates in F2009. Improved safety awareness resulted in employees being more aware of and willing to report minor injuries.
During the year, the safety team at Chibuluma was restructured to incorporate a training department and the mine’s induction programme was entirely revised. Additionally, an integrated computer database auditing system was commissioned to monitor and report safety and training information.
A number of additional developments took place at Chibuluma in F2009 which included:
* A geotechnical audit to model the mining sequence and method was conducted. The mine plan was modified to minimise ground failure risk;
* A “Mining Skills Improvement Programme” was delivered to employees, many of whom participated on a voluntary basis. (Altogether 134 of the 230 mining employees have enrolled, and 32 modules were completed in F2009);
* Three female truck operators successfully commenced work underground; and
* All mining, concentrator and engineering staff attended a one day safety teamwork presentation.
Chibuluma Mines plc Year
June 2008 June 2009
Tons milled (t) 555 575 568 187
Headgrade (%) 2,9 3,1
Overall recovery (%) 89,6 90,0
Copper produced (t) 14 583 15 940
Copper sold (t) 14 491 15 905
Total cash cost/ton sold (US$/t) 2 663 2 793
Mining profit before depreciation (R’000) 539 380 155 786
Depreciation (R’000) 49 070 72 781
Environment
No environmental incidents occurred during the year. The mine’s environmental reporting system is under development and several steps were also taken to improve the mine’s environmental impact during the year. These included:
* Weekly sampling of effluent discharges to ensure containment within regulated limits;
* Successful sealing of number seven shaft at Chibuluma West;
* Trail dust suppression sprays were installed on the secondary crusher and the system will be extended to other areas in future; and
* The rehabilitation of the Chibuluma South tailings dam, including lawn planting, is well under way.
Serving the community
Despite community expenditure being adversely affected by liquidity constraints, approximately US$50.000 was spent on supporting ongoing community initiatives, including continued sponsorship of both the local soccer and rugby clubs. The mine continued to drive the ‘malaria roll-back campaign’ through financing a large portion of a malaria spraying initiative in Kalulushi.
Local police were assisted with fuel, while repairs were carried out on district roads and local schools received building materials.
Chibuluma has played a significant role at the Kalulushi Mine Hospital. In F2009 the hospital continued to provide basic diagnosis and treatment for the wider community. The hospital was also instrumental in assisting with an anti-malaria campaign.
Progress was made in setting up an HIV/Aids centre at the Kalalushi Mine Hospital with the help of the Zambia National Aids Network. The HIV/Aids initiative leverages the hospital infrastructure, but further investigations are under way to rightsize the hospital appropriately for the number of in-patients that it services. Audiometric testing for employees, to be conducted on an annual basis is planned to be introduced at the hospital in the coming year.
In addition a number of additional projects were supported and these are listed in the Corporate Social Investment section.
Operational review
Chibuluma milled 568,187 tons in the period under review, representing an increase of 2,3 per cent on last year, while the tonnage mined improved by one per cent.
Mining the higher grade lower sections of the orebody delivered a significantly improved average copper grade of 3,1 per cent compared with the prior year’s 2,9 per cent. This positively affected sales performance, with a 9,8 per cent increase in copper tons sold of 15,905 tons.
The total capital metres developed of 2,225 metres was 410 metres lower than F2008 and was a deliberate reduction in response to the copper price decline in the second quarter of the year. This decision was subsequently revisited and the main ramp has been restarted.
A contract to sell all copper concentrate to Konkola Copper Mines terminated in December 2008, and F2009 production was allocated to three customers: Republic House Limited (4,697 tons) for exportation; Konkola (6,250 tons), and the Chambishi Copper Smelter (4,960 tons). A new agreement has been finalised to supply all concentrates to the Chambishi Copper Smelter from June 2009 to December 2009. During the year the mine was granted an export tax exemption as a consequence of the Zambian smelters’ inability to provide capacity during commissioning of the industry’s two new smelters (Konkola and Chambishi). Smelter recoveries increased following a new offtake agreement with the Chambishi Copper Smelter.
The deterioration of the copper price achieved from an average of US$7.811 per ton in F2008 to US$3.887 per ton in F2009 resulted in management implementing a cash flow improvement programme to mitigate its adverse effects on the operation’s liquidity. These measures contained the cash cost of copper at US$2.793 per ton for the financial year.
Although the overall tonnage of copper sold increased by 1,416 tons, the deterioration of the copper price substantially impacted the net on-mine revenue which fell from US$106 million to US$52 million for the year.
Smelting, transport and refining costs were marginally higher at US$917 per ton compared to the US$903 per ton achieved in F2008. This was due to the higher realisation costs incurred with the Chambishi smelter.
On-mine costs increased by 17 per cent from US$30 million to US$35 million. This equated to US$2.164 per ton, representing a seven per cent increase year on year from US$2.030 per ton. Production throughput was higher with 568,187 tons milled.
Consumable costs were affected primarily by the fluctuation in the oil price from around US$50 per barrel to over US$140 per barrel. This also substantially impacted on the domestic cost of many of the mine’s oil price related costs, in particular diesel, oils and explosives which all increased by over 50 per cent. The steel used for machine maintenance also escalated by more than 20 per cent. Payroll costs increased due to an annual pay award of 16 per cent, which was largely offset by the depreciation of the Zambian Kwacha.
Lower copper prices influenced Chibuluma’s expenditure on capital of US$16 million for F2009. This represented a seven per cent reduction and was 17 per cent below the approved budget. During the year under review, capital expenditure was focused on production items with the acquisition of two new underground hauling vehicles for US$3 million. Several machine rebuilds took place to extend the life of the existing fleet, at a cost of US$2 million in F2009. Expenditure at the metallurgical plant totalled US$0.2 million in F2009, a reduction from the US$2 million spent in F2008 when several large investments in crushing equipment were made.
Looking forward
Chibuluma has overcome significant challenges during the financial year, precipitated by the sharp fall in copper prices at the beginning of the second quarter.
Safety performance continued to improve, and this should continue into the next year as a result of current SHEC initiatives.
Copper production has shown an increase year on year since production commenced at Chibuluma South in F2006. The mine achieved record copper production of 1,600 tons of copper in June 2009 and based on current volumes and forecast grades in the deeper parts of the mine, this improvement trend should continue.
Sites with the potential for further exploration are being identified in the vicinity of the mine with the aim of extending Chibuluma’s life of mine.
Dim 5 Déc 2010 19:58