First Quantum sets new quarterly records for production, sales

JOHANNESBURG ( – Canadian base metals producer First Quantum Minerals (FQM) set a new quarterly record for copper production and sales of 131 349 t and 132 030 t, respectively, in the three months to June 30, surpassing previous records set in the first quarter of this year.

The company’s Sentinel copper mine, in Zambia, recorded a 53% production increase quarter-on-quarter, which FQM attributed to “steady operational and power supply improvements”.

FQM also recorded its highest quarterly production since the third quarter of 2014 at its 80%-owned Kansanshi Mining’s eponymous copper mine, owing to increased smelter availability and sulphuric acid supply from the mine’s smelter operation.

Meanwhile, the company’s higher sales volume quarter-on-quarter was mostly due to increased production at Sentinel.

The company announced comparative earnings of $38-million and cash flows from continuing operating activities of $304-million for the three months.

Further, FQM has completed two main initiatives in its strategy to survive volatile market conditions and sustained lower commodity prices. Firstly, the company put in place a new $1.82-billion debt facility equally comprising a term loan and a revolving credit facility. This new facility, which has improved the company’s financial covenants and amortisation schedule, matures in December 2019 and replaces the previous $3-billion facility.

Secondly, FQM completed the sale of Kevitsa nickel mine, in Finland, to Swedish mining company Boliden for $712-million in cash, plus restricted cash and working capital adjustments, of which $663-million was received in June this year. The remaining amount is due to be received in the current quarter.

FQM chairperson and CEO Philip Pascall noted that the company would maintain its “strong performance” as its focus on these priorities paid off.

He added that all of the company’s operations had shown cost and efficiency improvements, though he acknowledged that the Kansanshi smelter’s operation had the greatest impact on the company’s performance.

This was because the Kansanshi smelter provided additional acid at very little cost. “The extra acid helps recovery of mixed and high acid-consuming oxide ores. The combination of higher recoveries, negligible acid cost and the lower smelting treatment costs make a significant difference,” Pascall explained.

He also noted that the successful sale of Kevitsa and senior debt facility refinancing further strengthened the company’s financial position, “hence its ability to continue developing the Cobre Panama copper project, in Panama, amid volatile market conditions and sustained lower commodity prices”.

“Going forward, we are making progress with the complex process of arranging project financing for Cobre Panama. We will continue to be alert to any opportunities for further cost savings and improvements in profitability and cash flow,” Pascall concluded.

Source: Mining Weekly

Richard Chembe quits post as Investrust boss on poor health grounds

Investrust Bank Plc Managing Director Richard Chembe has left his post owing to poor health.

According to a brief statement issued by the Lusaka Stock Exchange, he Board of Directors of Investrust Bank PLC notified the market that Dr. Chembe retired on medical grounds on 22nd July 2016 in line with the provisions of the Employment Act Cap 268 of the Laws of Zambia.

“The Board wishes to further notify the market that Mr. Isaiah Chindumba will continue to act in the role of Managing Director until further notice. The Board would like to thank Dr. Chembe for leading the only indigenous Bank through its restructuring process leading to its current focus of sustaining the growth of its retail brand.

Dr Chembe who also served as State House Economic Adviser during the reign of late President Rupiah Banda has been on medical leave since he ruptured his vein last December.

Source: Lusaka Times

EU-funded project to help Zambia improve governance of mining sector

Being one of the world’s leading copper exporters comes with its own problems and one of them, for Zambia, is the huge task of monitoring its mineral production so as to ensure maximum revenues from the mines.

The European Union, which aims to strengthen economic governance in Zambia, allocated €4.7 million to implement the MineralProduction Monitoring Support Project (MPMSP) to help Zambia improve governance of its mining sector.

The project of 3 years’ duration, from 2015 to 2018, is being carried out by a consortium led by Adam Smith International (ASI) and including Ecorys (UK), the Revenue Development Foundation and PMTC (Zambia) Ltd. Zambian and international experts working within the Ministry of Mines and Minerals Development (MMMD) under ASI management and MMMD guidance.

The objective of the MPMSP is to ‘strengthen the ability of the Ministry of Mines and Minerals Development (‘MMMD’) to fulfill its mandate as mining authority to monitor effectively mining activities and mineral production in Zambia, and to share this information with other relevant government agencies to increase domestic revenue mobilisation.’

The project is in line with what President Lungu said is Government’s commitment to engaging the private sector in identifying solutions that will help the country offset some of the problems affecting the mining sector.

“While Government cannot control the external shocks such as falling commodity prices that have impacted negatively on the country whose economy is copper-export led, continued collaboration amid economic turbulences will help minimise the effects of the shocks,” said
President Lungu.

One of the milestones of the Mineral Production MonitoringSupport Project was the launch of the online export permit module at the Ministry of Mines and Mineral Development (MMMD), which went live on 1st June, 2016.

The Ministry is now processing and issuing all mineral export permits via a digital interface. This administrative system was developed by project consortium partner the Revenue Development Foundation.

Moving away from a paper-based system has increased efficiency and strengthened accountability in the issuing of Mineral Export Rights, as well as the recording of related payments thus significantly improving the audit trail.

June also saw the Ministry of Mines and Minerals Development participating in the Zambia International Mining and Energy Conference (ZIMEC 2016) in Lusaka. The Ministry proudly displayed some of the new gemmology equipment purchased by the European Union as part of the Mineral ProductionMonitoring Support Project’s work on capacity building.

Director of Mines Mr Mooya Lumamba, speaking at ZIMEC, said the project will enable his ministry to better monitor mineral production and to share information with relevant Government agencies such as Zambia Revenue Authority (ZRA) for purposes of collecting royalties and taxes.

“With a stronger monitoring system, Zambia will be able to realise revenue taxes in a proper and coordinated system and without declaring false production records by mining houses,” he said.

“Inevitably, the first sources of data on mining activities and mineral production are the mines themselves. However, currently the country’s authorities rely entirely on mineral production data and other related information provided by the private mining industry,”
said Mr Lumamba.

He said given the fact that Government authorities and private companies do not necessarily share the same agenda, this data and information may or may not be entirely sufficient and accurate, hence launching of the MPMSP.

Mr Lumamaba said the EU-funded project is concentrating on building capacity within the Ministry to re-establish physical presence on the ground to improve monitoring and inspection programmes in the mines throughout the mining cycle (exploration-mining-processing-export).

Mr Lumamba said the next element in the sequence is about effective data-management and data-sharing.

This includes management of data provided from the mining companies, and its verification through an MMMD monitoring system. It also includes information gathered from other sources as well as supporting effective inter-agency data and information-sharing arrangements and structures.

He said Zambia has made considerable progress in terms of transparency of the mining sector and benefit-streams from mineral exploitation.

The country has also joined the worldwide initiative EITI (Extractive
Industries Transparency Initiative).

Source: Lusaka Times

Zambia’s Inflation rate continue trending down. It’s now 20.2%

The monthly inflation rate for July has declined from 21.0 percent to 20.2 percent.

Central Statistical Office (CSO) Director John Kalumbi has attributed the drop to a reduction in the prices of vegetables and purchase of motor vehicles and airfares.

Mr. Kalumbi disclosed in Lusaka at a press briefing that the annual food inflation rate for July 2016 was recorded at 24.8 percent compared to 25.3 percent recorded in June, 2016 indicating a decrease of 0.5 percentages.

He said the decrease is due to lower prices of food stuffs such as tomatoes, beans and bananas among others.

Mr. Kalubi said the non-food inflation for July 2016 decreased to 15.3 percent from 16.5 percent recorded in June this year representing 1.2 percent.

He however disclosed that Zambia recorded a trade deficit in June this year amounting to K1, 905.9 million from K79.2 million recorded in May this year, representing an increase in imports than exports.

Mr. Kalumbi stated that the trade deficit shot up due to significant increases in imports by 41.2 percent from K5, 494.3 million in May to K7, 755.6 million in June this year.

The CSO Director pointed out that Zambia’s major imports are Kuwaiti and China.

Source: Lusaka Times

Zambia mining investments promote economic development

A new analysis of mining in Zambia for the past 100 years shows a clear historical link between levels of mining investment and wider economic development.

When mining investments are being sustained and high, there is growth not just in the mining sector, but also in the broader economy in jobs, new businesses and the overall prosperity of the population.

However, when the mining investments decline, it’s not just the mining sector that is affected but the entire economy, along with the material well-being of the population.

A new SAIMM paper entitled ‘Copper Mining in Zambia – History and Future’, penned by Jackson Sikamo, Alex Mwanza and Cade Mweemba, identifies three major periods in Zambia’s history when the levels of mining investments in the industry had a pivotal effect on the fortunes of the country.

The first period was in the early 1920s, when mainly American and South African companies invested massively in Zambia’s first commercial copper mines. Jobs were created, infrastructure was built, towns came into existence, and support industries emerged.

“Thus, by 1964, when Zambia was born, it had a strong economy driven by the mining sector,” the paper says. Zambia had one of the highest GDPs in Africa.

The second period was in the early 1970s, when government nationalised the Zambian mining industry and used its considerable revenues to drive an ambitious development programme.

However, because it came at the expense of continued investment in mining, the industry was unable to expand. Copper production and mining employment plummeted, and the economy went into decline.

“The business prospects of the mines were bleak, and so were those for the national economy, which was heavily reliant on mining”, the paper says.

The third period was from about 2000 onwards, after privatisation. Investors poured capital into new machinery, new mining methods and new processing and extraction technologies. New mines were started in North-Western province.

There was a sudden economic upturn, not only on the Copperbelt but in the country as a whole, with the mining industry as a pivotal contributor.
Significantly, this economic upturn occurred before the copper price started to recover, suggesting that it was the result of the investment itself, rather than an accident of commodity pricing.

By 2013, after more than US$12 billion of investment, Zambia’s copper output had tripled to 763 000 t, and direct industry employment had reached 90 000.

Looking to the future, the geology of Zambia shows “great potential for further investment in mining”, say the authors.

Consequently, the country’s prosperity hinges on the creation of a stable mining policy, internationally competitive tax rates and an investor-friendly environment.

Source: Mining Review Africa

Update on Maamba Collieries Limited Thermal Power Plant

We are pleased to inform you that Unit 1 (150MW) of Maamba Collieries Coal Fired Power Plant (CFPP) was synchronized with the national grid yesterday, Sunday, 24 July 2016 at 12.57 hrs successfully.

Prior to this, Turbine 1 was rolled at 16.45 hrs on 23 July 2016 and the generator open circuit/short circuit/excitation system tests etc were conducted during the night on this day and 24 July in the morning.

ZCCM-IH owns 35% of Maamba Collieries Limited.

Maamba Collieries aims to bridge the power shortfall in Zambia

An impressive array of investors and lenders has enabled Maamba Collieries to launch and implement an ambitious power project that makes use of low-grade coal.

Maamba Collieries was incorporated in 1971 under the ownership of the Zambian Government, and has since become the largest coal mining company in the country, boasting an opencast coal mine situated near the village of Maamba in the Sinazongwe district of Zambia. The original mine was operational for many years, but low-grade coal was left to stockpile as waste. This resulted in severe environmental pollution and health hazards, both water and airborne, due to spontaneous combustion and acid mine drainage.

As Zambia is a country with growing energy needs – and, indeed, a lack of energy in many areas – the government devised a strategy: in order to mitigate the environmental risks and to enable Maamba Collieries to effectively exploit its resources, the government decided to establish a thermal power plant that could make use of low-grade coal. Consequently, this project was able to kill two birds with one stone, by cleaning up the environmental mess left by the stockpiles of coal while providing much-needed energy to the country.

The project is the first of its kind in Zambia, as it provides a dependable and sustainable base-load power source, which is crucial to the country’s energy security. It also provides Maamba Collieries with infrastructure that is ready to scale-up in line with the growing demand for power, not only in Zambia, but also in the entire sub-Saharan region.

There are two key elements to the project: the first is a coalmine revival programme, which includes the establishment of a coal handling and processing plant. The second and most important feature is the setting up of a 300MW mine mouth (composed of two 150MW sites) coal-fired power plant, along with a 48km, 330kV double circuit transmission line and raw water pump house with a 21km-long pipeline.

Safeguarding the project
The Maamba Collieries project is being implemented by Maamba Collieries Limited (MCL). A project of this size, scale and significance of course requires a huge capital investment, and so the Zambian Government decided to bring in a strategic partner with the necessary technical experience, financial strength and track record to ensure its successful completion. Following a global bidding process in 2010, Nava Bharat (Singapore) (NBS) was selected. NBS acquired a 65 percent shareholding in MCL, while ZCCM Investment Holdings held the remaining 35 percent.

The Maamba Collieries project would bridge the current power shortfall, especially at a time when the lack of reliable power is hampering the region’s development.

NBS is a wholly owned subsidiary of Nava Bharat Ventures, an Indian-listed business conglomerate, while ZCCM is a company mainly owned by the Government of Zambia. It is a unique and collaborative project in Africa, wherein the sponsors are from Singapore, India and Zambia, the principal contractors are from China, and lenders come from across the globe.

To guarantee the completion of the project, MCL signed an engineering, procurement and construction contract with SEPCO – one of the largest thermal power construction groups in China – to bring much-needed expertise to the project. MCL has also employed circulating fluidised bed combustion technology for the power project, which is known and recognised as an environmentally friendly technique with the additional ability to use thermal-grade fuels of diverse origins and qualities.

To ensure a long-term customer base, MCL has secured long-term purchase agreements: the firm has signed a 20-year power purchase agreement (PPA) on a ‘take or pay’ basis with ZESCO, the local state-owned utility. The tariff payable to MCL is denominated in US dollars and is subject to indexation based on US producer prices. As a security mechanism over PPA receivables, MCL has also entered into an escrow agreement with ZESCO, which regulates the flow of revenues received under the PPA. The Zambian Government has also provided a guarantee that will remain in place until the escrow account mechanism is operational to the satisfaction of MCL and its lenders.

The Government of Zambia has acted as a strong supporter of the Maamba Collieries project, as it is strategically important for the Zambian economy, providing a reliable energy supply for the country. MCL has therefore entered into an implementation agreement with the government to support the obligations of ZESCO, covering standard clauses on compensation in case of a change in the law, political force majeure or government default. It also provides customary buyout rights and termination compensation, designed to cover senior debt and equity. MCL has also signed an investment promotion and protection agreement with the government, wherein it is entitled to specific rights, such as: employing local and expatriate employees; security interest over project assets to the lenders of the project; designated tax and duty exemptions; and assistance in obtaining permits, including the licenses and consents required for implementation of the project.

Financial aspects
The power plant’s capital expenditure is estimated at $738m, and the coalmine’s capital expenditure – including mine establishment expenditure – is estimated at $105m, creating a total capital expenditure of $843m. The project achieved financial closure in July last year, making it the first independent power project of this size in entire sub-Saharan region to achieve this status. However, before financial closure itself, sponsors committed their entire equity, and construction was 80 percent completed.

The project is being funded on a debt-equity ratio of 70:30. Sponsors have contributed equity of $253m, while debt totalling $590m has been raised from a consortium of lenders comprising large international commercial banks and development financial institutions on a limited recourse project finance basis.

These banks include the Industrial and Commercial Bank of China, Bank of China, Standard Chartered Bank and Absa Bank, which have been secured on the basis of the insurance cover of Sinosure, the export credit agency of China. This is the first private power project in the sub-Saharan region to receive export credit agency insurance cover from Sinosure. Furthermore, the domestic bank Barclays Bank Zambia is also contributing, along with a number of developmental financial institutions, including Development Bank of Southern Africa, Industrial Development Corporation of South Africa and Africa Finance Corporation.

Future challenges
Zambia’s reliance on hydropower to meet current and future electricity demand faces significant challenges, such as: increased economic development leading to growing demand for other water uses; increased water needs to address conservation goals in light of the potential impact of climate variability on water supply; and increased power demands requiring additional water for hydropower. With Maamba Collieries being the only thermal power plant of its size in the country, the project diversifies Zambia’s energy sources from 96 percent hydropower and offers reliable base-load power.

Due to drought conditions, hydro projects in Zambia are underutilised, resulting in the country facing a power deficit of 760MW as of April this year, which constitutes about 40 percent of total demand. There are power cuts in the country for between eight and 12 hours per day. The imminent completion of the Maamba Collieries project would bridge the current shortfall, especially at a time when the lack of reliable power is hampering the region’s development, making the project of significant strategic importance to Zambia.

The project will also help Zambia grow on a socioeconomic level, in terms of health, education and vocational training, in addition to supporting the industries upon which the country’s economy relies – most notably, mining and agriculture. Presently, these industries are operating at very low capacities due to the country’s frequent power cuts.

Now in an advanced stage of completion and scheduled for commissioning in July this year, the project offers hope to other African nations that large-scale projects can take off without real movement of precious raw materials such as coal and minerals. Overall, the project has resulted in significant economic empowerment and growth in the under-developed Southern Province of Zambia.

Source: World Finance

ZCCM-IH hands over a solar powered computer lab to Kateshi Primary School in Kasama

The state of the art computer lab worth more than K200 thousand (USD 19, 000), is the only one of its kind in the area, and will be used by more than 6 surrounding schools, benefiting more than 6, 000 pupils.

It will be the first time that most learners will see and use a computer. This development will enable the learners to adequately prepare for their ICT grade 7 and 9 examinations.

The lab was supported by other partners such as Shoprite (Zambia), Acrow (RSA), Katenga (RSA) & Olam.

Because of the computer lab, and the planned school library, Government through the Provincial Education Officer, Dr J. Kalumba, indicated that the school has been upgraded to a secondary school, the only one in the area.

Kateshi Primary School has been in existence since 1981, located inside the Olam coffee Estates premises, 30 km away from the Kasama Central Business District. It is surrounded by 15 villages, and kids often cover on average about 5 km to reach this school.

The school has a total of 940 pupils with six classroom blocks.

ZCCM-IH will continue offering any ICT needs and support for this lab.

Lubambe Copper Mine sets up fish farm

To empower farmers with a diversified source of income in Chililabombwe, Lubambe Copper Mine has constructed a fish farm with a capacity to stock up 3,000 fingerlings bream, representing a market value of K60.000.

Bream is one of Zambia’s most sought-after fish and is a money-spinner.

Lubambe’s corporate social responsibility manager Joel Bwalya said the mining company partnered with a local farming co-operative in Kasapa village to build the fish farm near Kebumba stream.

According to a latest newsletter on mining in Zambia, an initiative by the Zambia Chambers of Mines, Mr Bwalya said the implementation has proved to be a success and as such the mine intends to build another fish farm.

He said the enterprise is a good source of revenue for most farmers in the area and far exceeds what they would get by selling maize.

“We reckon that this time, we will be able to seed the fish farm with 4,000 fish, and that means a bigger harvest. The villagers are clearly excited by the potential of fish-farming and its ability to help them diversify,” Mr Bwalya said.

He said the fish farm is a partnership between the mine and farmers.

Mr Bwalya is hopeful that fish-farming of this sort will evolve into a fully-fledged business with huge commercial potential for the entire country.

Commenting on the development, Kasapa village headman Langson Pensulo said the fish farm has helped improve the livelihood of the villagers in the area.

Source: Daily Mail