First Quantum contemplates Zambian smelter

With concerns mounting about Zambia’s smelting capacity, First Quantum Minerals (FM-T, FQM-L) is evaluating whether the time has come to build and operate a copper smelter. A decision will be made before the end of the year.

Concentrate from its Kansanshi copper mine is currently treated at smelters in the country but from time to time, due to limited capacity, the mine has sold its copper concentrate to third parties for export.

And with “the substantial increase in production expected from the Kansanshi mine together with anticipated new production in Zambia including from the Sentinel deposit,” First Quantum says, building and operating a smelter may make the most sense. 

In May the company announced that it has started phase one of a two-phase expansion project at Kansanshi to expand annual copper production capacity there from the current 250,000 tonnes to 400,000 tonnes by 2015.

Phase one of the project will boost production capacity to about 285,000 tonnes and expand the annual treatment capacity of the oxide circuit by about 20% to 8.5 million tonnes, while “building in flexibility to allow for the mixed and sulphide circuits to be switched as needed to suit mining activity.” The expansion will include the use of relocated equipment from the recently closed Bwana Mkubwa copper SX/EW plant as well as new installations. Phase one is expected to be completed during the fourth quarter of 2011.

Phase two is slated to start in the second half of 2012 with commissioning targeted for the first half of 2014. Phase two involves building a new concentrator with a planned throughput of 25 million tonnes a year.

The Kansanshi mine, the world’s eighth-largest copper mine according to the company’s figures, is 80%-owned by Kansanshi Mining PLC, a subsidiary of First Quantum. The mine is about 10 km north of the town of Solwezi and about 180 km northwest of the Copperbelt town of Chingola. As of Dec. 31 2010, the mine had an estimated life of 12 years based on identified mineral reserves, a copper price of US$2 per lb., and a gold price of US$800 per oz..

Meanwhile in April, First Quantum received large-scale mining licences from the government of Zambia for the development of its Trident project, which give it the right to carry out mining operations for a 25-year period. 

“Based on an internally-generated resource estimate, the company is proceeding with the design of a project that will initially produce 150,000 tonnes of copper in concentrate annually then rising up to 300,000 tonnes of copper in concentrate,” the company said in a news release. “Once the resource drilling is complete, the production target may be increased further.”   

At presstime in Toronto First Quantum was trading at $133.79 per share within a 52-week range of $52.76 (July 5 2010) and $148.00 (April 6 2000).