First Quantum plans $2 bln Zambia expansion

[bingogo]

Wed Jun 15, 2011 1:38pm GMT
By Ed Stoddard and Chris Mfula

LUSAKA (Reuters) - First Quantum Minerals (FM.TO) plans to spend $2 billion over the next three to five years on expanding its copper operations in Zambia including a new smelter, a senior company official said on Wednesday.

Kwalela Lamaswala, the Canadian-listed company's resident director in Zambia, told Reuters on the sidelines of a mining conference that a 1.2-million-tonnes-a-year smelter was needed for all of the concentrate coming out of the company's mines.

"The smelter will cost $550 million. So $2 billion over the next three to five years (for expansion projects)," he said, when asked about the company's spending plans. He did not say when the smelter would come online.

Lamaswala said the costs would be funded from debt or cash resources and that the aim was to lift output at Kansanshi mine to 400,000 tonnes per year from its current rate of about 250,000 tonnes.

The initial capital expenditure on the project was approved at a board meeting in Toronto recently, Lamaswala said, adding that the company's new Trident mine would account for about $1 billion of the total.

First Quantum is waiting for approval from the government environmental agency to start the project, he said.

Asked about government audits of the industry to extract unpaid taxes, Lamaswala said First Quantum was unlikely to be found in arrears.

"I don't think we will be affected, because our mine Kansanshi has paid more than 70 percent of all taxes paid by mining companies here," he said, adding that the company had paid over $1 billion in taxes over the past five years.

The mine minister earlier told Reuters that more audits were planned after previous ones uncovered about $200 million in unpaid taxes.

Zambia is Africa's top copper producer but it is one of the poorest countries in the world.