Message Lun 9 Sep 2013 16:31

Zambia Kansanshi Copper Mine: Production Threatened by Risin

Copper production at Zambia's largest copper producing mine is facing a looming threat as stockpiles of unprocessed concentrates rise due to inadequate treatment facilities in the country, a company official said Monday.

Kansanshi Copper Mines spokesman Godfrey Msiska said Kansanshi, a unit of First Quantum Minerals Ltd. (FM.T), has stockpiled about 75,000 metric tons of unprocessed copper concentrate worth around $133 million, which it can't export due to the 10% levy introduced last year on unprocessed mineral exports.

"The stockpiles are jamming our operations and yet the local smelting capacity is not sufficient," Mr. Msiska said, adding that the company is seeking a government tax waiver to export the stockpiles.

The rising stockpiles are overwhelming the company's storage and limited processing facilities, a company executive said, adding that this could soon reach levels that may inhibit production.

A government official at the mining ministry said talks over incentives and tax waivers are progressing well but warned that miners shouldn't expect a lot of concessions. "The mining companies are still making profits despite reduced prices," the official said.

The levy on the export of unprocessed concentrates is intended to encourage value to be added locally and is part of a trend of restricting unprocessed minerals across Africa as resource-rich countries seek to benefit more from natural resources. A ban on exports of unprocessed minerals in neighboring Congo, Africa's second-largest copper producer, is expected to come into effect in January.

Kansanshi ships its concentrates for treatment at Vedanta Resources PLC. (VED.LN) Nchanga Smelter and the Chinese-owned Chambishi Copper Smelter, both in the Copperbelt, about 160 kilometers away. About 60% of the company's copper output is in concentrate form, requiring smelting and refining to produce cathodes.

First Quantum is building a $500 million copper smelter as it seeks to end its reliance on Copperbelt smelters, which are also increasingly coming under pressure due to rising copper production across the country.

Zambian miners continue to be battered by low global copper prices, which have been weighed by concerns over Chinese demand and higher global production.

First Quantum is also developing the $2 billion Sentinel copper projects in Zambia. The company said last month that its expansion projects in Zambia would come on stream in the next 18 months. It is expected to employ an additional 2,400 people and produce 445,000 tons of copper a year.

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