KCM grapples to remain operational in Zambia

Operational problems at Konkola Copper Mine (KCM) have heightened because of a myriad of problems besieging the country’s leading producer of copper and cobalt.

Until Friday, Sept.26, KCM had power restricted to a number of operations including the concentrator at the Tailings Leach plant and the underground section which later was flooded with water, following a US$44 million debt accrued in unpaid energy bills to power supplier on the Copperbelt – the Copperbelt Energy Corporation (CEC).

Despite the unpaid bills, CEC decided to restore 100 percent power to KCM premised on the understanding that the company would meet its obligation as directed earlier by the Lusaka High Court that the company pay the US$44 million which had been outstanding since April this year.

CEC spokeswoman, Chama Kalima said the restoration of full power supply to KCM was done out of goodwill despite KCM failing to meet its financial obligations adding that is not right for any business that means well to wait for court orders for it to pay for services consumed.

“It is our hope that in response to this show of good faith, KCM will pay all its outstanding bills and begin to pay all their future bills as they fall due,” she said.

CEC believes it is important that all parties take learning points from this incident and begin to uphold obligations in accordance with the Power Supply Agreement (PSA), she added in a statement following interventions by the Ministries of Mines to have the matter harmonized to avoid ‘sabotage’ to the economy.
“Irrespective of this decision, CEC still reserves all its rights per provision of the PSA with KCM, which CEC will exercise should it become imperative to do so in the near future,” Kalima added.

The refusal by KCM to pay against invoices issued for about six months, even on undisputed amounts, has adversely affected CEC’s business and subjected the power company to subsidizing and sustaining KCM operations for the said period.

As a consequence, CEC has also been unable to fully discharge its obligations to ZESCO Limited.

Despite their continuous defaulting on payments, KCM also argues that they are not liable to pay interest, in complete contravention of the PSA.

“All this is unacceptable in normal business practice and should not be encouraged,” Kalima stated.

KCM spokesperson Shapi Shachinda has since confirmed the restoration of power to affected areas of the mines but lamented that the discharge of water from underground would take some weeks to be undertaken.

This is in the wake of the company losing US$3.3 million in revenue as well as 482 tons of copper in interrupted production of the red metal over the past few days.

on the operations of the mines by the management and seeks that the miner should revive its operations by injecting fresh capital into the company, these sentiments were brought to light by Vice President and leader of Government business in Parliament, Guy Scott.

Responding to lawmakers, Scott said it was his view that fresh capital be pumped into the mining company.

The lawmakers wanted to know the future of the mining company in view of reports in the media to which Vice President replied; “Our Government’s view is that KCM needs a fresh capital injection. Our experts, consultants and advisors say there is a requirement to put in more money if KCM is to be more viable.

”When Government suggested to KCM to recapitalise the mine, the other shareholders, Vedanta, responded by saying Government itself through ZCCM Investment Holding must put in money, Scott added.

Vedanta had also further suggested that they be allowed to borrow money from the local banks.

Dr Scott said the idea of borrowing money locally would not be okay as other sectors such as agriculture would be affected, he told lawmakers during question and answer sessions on Sept. 26.

Meanwhile, Minister of Mines, Energy and Water Development Christopher Yaluma earlier on Sept. 25 cited poor management of Konkola Copper Mines (KCM) as the major reason the mining firm has failed to pay the Copperbelt Energy Corporation (CEC) US$44 million in electricity bills.

KCM is currently going through serious financial challenges and that Government is closely monitoring the situation at the company to ensure it does not result in job losses.

He told lawmakers that is sad that the giant mining firm will not be able to meet the set production levels in the next quarter due to the power supply which has been restricted to 90 percent by CEC instead of the required 100 percent.

“Mr Speaker, although KCM is capable of running the mine, it will not manage to meet the production levels we have set in the next quarter due to the power restriction.

“But what I have to state is that KCM is going through serious financial challenges due to poor management of the mine and this has also resulted in the company failing to pay the money it owes CEC in electricity bills,” the Minister said.

Earlier, KCM, through its parent company Vedanta Resources mocked Zambians over its U$500 million profit being made annually in the Southern African country since it invested a paltry US$25 million in 2004.

And President Michael Sata had earlier warned the company against undertaking its planned mechanization of the mining company in which over 1,579 workers were to be laid off to replace them with machinery.

President Sata had also warned Vedanta to follow the country’s policy of seeking to create employment than facilitate “redundancies” to the nationals.

However, Shachinda in a statement has reaffirmed KCM’s commitment to remain in Zambia and contribute to the country’s growing economy and that there were no plans to leave the country in spite of the current problems being faced.

Vedanta Resources have since 2004 invested close to US$4 billion in operations and corporate social responsibility programs.

Source: Mining News Zambia

‘Erratic power supply’, delayed vat refunds cost Chambishi Metals PLC revenue, affects mine expansion-ZCCM IH

Erratic power supply coupled with unpaid for US$23 million owed in Value Added Tax forced Chambishi Metals Plc, a unit of Enya Holdings Ltd. to incur losses during the just ended financial year, Zambia’s Holding company-ZCCM IH says in a report.

ZRA has withheld over US$600 million in value-added tax repayments to mining companies that have failed to provide importer documentation required to qualify them for VAT reclaim on the zero-rated copper exports.

In its report ahead of the planned Annual General Meeting (AGM) on 7 October in Lusaka, ZCCM IH, which holds 10 percent shares in the copper, cobalt and nickel producer says the Copperbelt based Chambishi metals lost US$9.5 million as a result of erratic power supplied to the mines.

Copperbelt Energy Corp. buys power from the country’s utility, Zesco and sells an average 520 megawatts daily to mines operating on the Copperbelt, Chambishi Metals Plc inclusive, to run and produce various metals including copper for onward exports to the international metal market.

According to the report, ZCCCM IH adds that the erratic power supply affected copper cobalt and nickel production at the miner during the financial year ended 31 March 2014, the report said citing ZCCN IH acting Chief Executive Officer, Mabvuto Chipata.

Accordingly, the erratic power outturn resulted in the mine losing out 3, 300 tons of Copper and 410 tons of Cobalt said Mr Chipata adding that during the year under review, Chambishi Metals Plc faced two notable strategic challenge.
“Chambishi’s copper production performance continued to be adversely affected by power fluctuations, which the company estimated resulted in losses amounting to $9.5million, of which $6.8 million resulted from lost production of 3,300 tons of Copper and 410 tons of Cobalt,” Chipata added.

The problem was compounded by the delayed resolution of the monies owed to various mining companies in Zambia by Government in value Added Tax (VAT) and the miner is one of those affected by the withheld tax refunds.

According to the report by Chipata, Chambishi Metals Plc is owed $6.5 million by ZRA in audit claims carried out during the period 2006 to 2011.

Additionally, it is owed a further $23 million by ZRA as at March 2014 relating to a Value Added Tax (VAT) refund, all which have contributed to the poor liquidity of the company.

“The matter remains unresolved but given that Chambishi estimates that 90 percent of its input costs are VAT related and deductable, the suspension has had a material effect on its day to day operations,” Chipata stated in his report.

Non Ferrous Mining Africa (NFA)’s capital expenditure on the South East Ore Body (SEOB) project is estimated at US$61.6 million during the year ended 31 March this year.

The expected investment cost for the project was estimated at approximately US$830 million and the project is expected when completed in or around 2017, create about 5,000 jobs.

Loan financing of US$548 million is being arranged from the Export-Import Bank of China to partially finance the South East Ore Body project with the balance coming from internally generated funds,” Chipata adds of the project.

The SEOB project involves mining and processing of copper ore to concentrate stage for onward processing into finished copper cathodes at the Zambian smelters within Chambishi, Mufulira and Kitwe.

ZCCM-IH has 10 percent equity in Chambishi Metals Plc while Enya Holding BV (ENRC Group, which once owned Luanshya Copper Mines before abandoning it at the height of the global financial crisis, owns 90 percent in the Chambish project.

Chambishi is a mining, tolling and refining company with extensive copper and cobalt reserves. It has undertaken several improvement and expansion projects that will streamline its operations and increase both the cobalt and copper production.

Source: Mining News Zambia

ZCCM-IH Pays first dividends to shareholders since inception

Zambia Consolidated Copper Mines Investment Holdings (ZCCM IH), the country’s mine holding company has since inception over 10 years ago paid dividends to the country, the company says on its website according to Bloomberg News wire.

According to the report, the company (MLZM), the company formed to hold the Zambian state’s minority stakes in local copper mines, has for this year managed to raise capital to pay dividends to the state since 2000.

The government will receive 220 million kwacha ($35 million), helping to bolster state revenues that Finance Minister Alexander Chikwanda last month said were “severely constrained.” Bloomberg cites finance minister Alexander Chikwanda as saying recently.

The company which is scheduled to hold its Annual General Meeting on 7 October in Lusaka this year disclosed the dividend in the 2014 annual report posted to its website. It’s the first since its formation, according to ZCCM data.

Zambia, Africa’s biggest copper producer after the Democratic Republic of Congo, owns 87.5 percent of ZCCM Investments.

The company holds stakes ranging from 10 percent to 30 percent in businesses that moved into private hands in the 1990s after the government reversed former president Kenneth Kaunda’s nationalization program.

ZCCM Investments Holdings Plc (ZCCM-IH) is one of Zambia’s prime investments holdings companies with the majority of its investments in the copper mining sector of Zambia. It is quoted on the Lusaka, London and Euronext Stock Exchanges.

The Company’s shareholders are the Government of the Republic of Zambia (GRZ) with 87.6% shareholding and private equity holders with 12.4%. Minority shareholders are spread throughout the world in various locations. ZCCM-IH is a successor company to Zambia Consolidated Copper Mines Limited (ZCCM Ltd).

Prior to privatization in 2000, ZCCM Ltd was a consolidated copper mining conglomerate which owned and operated a number of mining divisions which at privatization were sold off as independent mining companies.

ZCCM Ltd was majority owned 60.3% by the Government of the Republic of Zambia, 27.3% by Zambia Copper Investments Ltd (ZCI), an associate company of Anglo American Plc and 12.4% by private investors.

According to data on ZCCM IH website, the company owns 100 percent stake in Ndola Lime Company, 35 percent in Maamba Collieries Limited, 20.6 percent in Konkola Copper Mines, 20 percent in power provider to mines on the Copperbelt-Copperbelt Energy Corporation or ( CEC), 20 percent shares in Kansanshi Copper mine, a unit of First Quantum Minerals and 20 percent in Luanshya Copper Mine.

Other mines are 15 percent in Chambish Non Metals Corporation (CNMC), Luanshya Copper Mines, 15 percent, 10 percent in Non Ferrous Corporation Africa (NFCA plc), 10 percent in Chambishi Metals Limited and 10 percent in Mopani Copper Mines Limited, a unit of commodity trader, Glencore Xstratra.

Source: Zambian Mining Magazine

Enviro company limits dust at Zambia copper mine

Environmental management company I-Cat Environmental Solutions is supplying Zambian copper mine Kansanshi, owned and operated by mining companies First Quantum Minerals and ZCCM-IH, with its GreenGrip gravel road sealant.

The sealant eliminates dust on the mine’s semipermanent roads, preventing the adverse effects of dust on miners and reducing maintenance costs caused by dust-related failures, explains I-Cat Zambia director Chris Smit.

He notes that GreenGrip, which is an environment-friendly polymer-based product, was first applied at the mine in June 2013.

“Normally, mines use water to get rid of dust, but by applying GreenGrip, you prolong the effect, as GreenGrip has a special ingredient mixed with the polymer that binds soil and seals the road.

Dust is a huge problem on Zambian mines, particularly at this time of year, owing to the dry and windy conditions

– Chris Smit

“Instead of water bowser trucks constantly spraying water, GreenGrip needs to be applied only once every two to three days, depending on the dust levels at the mine. This significantly reduces maintenance and associated costs,” Smit tells Mining Weekly.

He notes that, while Zambia currently has air-quality laws in place, Zambian mines do not often adhere to them. This, however, is starting to change, says Smit, as international companies, which need to adhere to a country’s laws to remain operational, are becoming more prevalent in Zambia’s mining industry.

Smit highlights that dust is a huge problem on Zambian mines, particularly at this time of year, owing to the dry and windy conditions.

“Many people work in plant and pit areas, and on haulage roads, which are very dusty. Dust affects their health and, by applying these products, mines can reduce the dust levels by 40% to 50%, making a significant difference to the health of mine personnel,” he emphasises.

Smit adds that temporary roads, particularly around pit areas, that are not treated with GreenGrip are, however, treated with RDC 20, which is a more cost-effective dust palliative product offered by I-Cat.

Supplying Zambian Mines
He notes that I-Cat has been supplying the Zambian market since 2011 with its liquid soil additive RDC 20, which binds fine soil into heavier particles to prevent dust from becoming airborne. I-Cat has also introduced its new bitumen-based GreenBit product, which can primarily be used on main haulage roads to prevent roads from being washed away by rain.

“Owing to heavy rainfall in Zambia, GreenBit was developed in 2013 for application on main haulage roads and is currently being used on ferrous metals miner Assmang’s Bruce and King mines, in the Northern Cape, South Africa, with huge success. We apply this product to roads in Zambia to stabilise the roads during rainy seasons,” he explains.

GreenBit, as the name suggests, has an additive mixed with a lower dose of bitumen, which reduces the environmentally harmful impact of the more traditional bitumen-based products.

“We are an environment-friendly company and, as such, we strive to supply products to mines that have the same effects as a bitumen road – commonly known as asphalt – but with lower toxicity levels.

“Our mission is to prevent environ- mentally harmful products from spilling into runoff streams and dams, which is why we developed green products such as GreenGrip and RDC 20.

I-Cat Zambia has been registered with the Zambian Environmental Management Agency (Zema) since 2012 and all its products have been tested and declared environment-friendly by Zema.

Source: Mining Weekly

First Quantum, Metorex mining increase Copper production, turnover in Zambia

Two of some of the leading multinational mining companies operating in Zambia, Africa’s leading copper producer, have found a niche for their investment and have this year increased mineral production and also increased their earnings.

First Quantum Minerals Limited, the Australian listed and diversified miner, with operations in Zambia at Kansanshi and the new ‘Greenfield’ US$2 billion Kalumbila Mine in north western province increased its copper production by four percent during the last three months to 30 June this year to 107,808 tons compared to 103.694 tons three months prior.

Copper sales per ton rose over 10 percent to US$114,449 against US$95,491 during three months ending 30 June this year at Kansanshi mine in Zambia as the cash cost of copper production per pound also increased to US$1.45 against an earlier US$1.34 three months earlier.

Nickel production in contained tons dropped to 10,651 against 11,927 three months earlier, although realized copper prices/per pound rose to US$12,223 against US$10,875 recorded three months prior to 30 June, the company said.

Gold sales rose US$60,135 against US$59,381 during the three months to 30 June this year while gold production dropped 60,723 ounces against 63,567 ounces three months prior to the period under review, it said in its report.

Sales revenues increased to US$945.1 million against US$869.3 million during the three months ending 30 June with gross profit rising to US$293 million against US$201.1 million.

Expected group production has been revised to be between 418,000 and 444,000 tons of copper, 45,000 and 48,000 tons for nickel, 221,000 tons and 242,000 tons for gold between 55,000 and 60,000 tons for Zinc respectively.

It has revised its capital expenditure for the group at US$2.4 billion from an initial US$2.2 billion, excluding capitalization of any pre-commercial production and capitalized interest.

Metorex Minerals Ltd. achieved a turnover of US$60.4 million at its owners Chibuluma Mine in Zambia during the six months ending 30 June this year as profit before tax re declined to US$14,490 at the end of the six months ending 30 June this year from US$15,888 recorded a year earlier.

Despite recording an increased production of the red metal to five percent, turnover for the company during its operations over six months remained flat chiefly on account of reduction in average copper price.

At 30 June, this year, Metorex Ltd’s Chibuluma mine spent US$3.8 million on development of its ‘Greenfield’ Chifupu copper project on the outskirts and south of Kalulushi on the Copperbelt, intended to extend the mine lifespan to the year 2020 from the estimated 2017.

To boost mine operations and increase copper outturn Metorex Mining, the owners of the Chibuluma mine have approved about US$24 million to be spent on the development phase of the Chifupu project and ensure it is done as scheduled, says Eustus Munsaka, Metorex’s Chief Financial Officer in his report.

During the period the company paid US$5.882 million to shareholders in interim dividends.

First Quantum Minerals and Metorex are among the multinational miners that emerged into Zambia after the privatization of the mining conglomerate-Zambia Consolidated Copper Mines (ZCCM) in the late 1990s as Zambia sought to promote private sector ownership of the mines in the copper-rich country.

Since the privatization of the mines, an investment of US$8 billion has been ploughed into the mines with copper production projected to rise to 1.5 million tons by next year and later rise to over 5 million tons by 2022, according to projections by the chamber of mines of Zambia, basing on the oncoming projects at various mining companies in the country.

Source: Mining News Zambia