Message Mar 1 Sep 2009 07:16

Kansanshi Mine projects rise in copper production Written by

Kansanshi Mine projects rise in copper production
Written by Nchima Nchito Jr
KANSANSHI Mine has projected a copper production of up to 244,000 tonnes this year, up from the current annual levels of 175,000 tonnes.

Company corporate affairs manager Godfrey Msiska stated in response to a press query that Kansanshi Mine had recorded a steady increase in production after an investment of about US $600 million since First Quantum Minerals Limited, the majority shareholder, took over operations.

Kansanshi is a copper-gold venture in Zambia’s North Western Province.

“Total investment in Kansanshi Mine from inception to date is over US $600 million. Most of this has gone into infrastructure development, plant and machinery,” Msiska stated “The latest investment was into the second sulphide circuit, to bring total crushing capacity to 18 million tonnes of ore. We call this 'the 12 million tonne upgrade' as we are now capable of crushing 6 million tones of oxide ore and 12 million tones of sulphide ore.”

Msiska stated that Kansanshi had also built a fourth tank house to increase the annual copper cathode production capacity to 140,000 tonnes per year.

“Each tank house is capable of producing 35,000 tonnes of copper cathode per year. All new projects were commissioned mid-2008 and are fully contributing to production,” he stated.

Combined with the revised projected production target at Lumwana Mine for 2009 of between 110,000 and 120,000 tonnes, total copper production in North-Western Province is expected to reach 364,000 tonnes, making the area a major player in the country’s mining sector with a possibility of overtaking the Copperbelt in the near future as the traditional copper power house.

And commenting on the recent slump in copper prices and its impact on Kansanshi, Msiska stated that the mine weathered the storm created by the collapse in metal prices by rationalizing its operations to enhance efficiency and re-negotiating its contracts with suppliers.

“This enabled us to contain our production costs within the low copper prices and helped us to avoid massive job lay-offs. The entire mine site laid off only 130 employees out of a labor force of 3,400; some previously laid off workers have since been re-employed,” stated Msiska “The increase in the copper price we are seeing now means Kansanshi will generate higher sales income and improve its bottom line, in terms of profits. Such profits will enable us to invest more in the mining operation, for the long term. This is what we have done with profits made in the past.”

And Lumwana Mine corporate affairs director Nathan Chishimba stated that the mine commenced operations at the height of the global economic crisis, during which metal prices had collapsed.

“Lumwana was extremely unfortunate in as far as the copper price cycle is concerned because during the entire period of the boom cycle between 2005 and 2008, the project was still in its construction phase. Since 1999, the total investment in Lumwana by Equinox Minerals has been around US $1.2 billion. Of this amount, shareholders have provided about US $558 million, while a consortium of 14 international banks and lending institutions have syndicated a debt facility of US $664 million.” he stated “The funds mobilised from shareholders and lending institutions have been applied to conduct extensive project preparation and feasibility studies and construction of mining infrastructure, construction of a process plant, procurement of a mining fleet and installation of 21st century mining technology to ensure the Lumwana Copper Project operates at optimal scale as Africa’s largest copper mine”

Chishimba stated that it was gratifying that the last few months had seen an upturn in copper prices and hoped the trend would be sustained.

“However, for a company like Lumwana, this does not represent any immediate benefit to shareholders, as the lenders to the project have the first call on any operating surplus that the company gets in the first years of the project’s life,” stated Chishimba “The positive aspect of a continued good run in copper price levels is that increased revenue will enable the company to retire its debt obligations faster, so that the company can grow and reinvest its retained earnings into its ongoing efforts to build a world class mining house that contributes to Zambia’s increasing profile as a premier mining jurisdiction.”

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