Kansanshi Mining Plc renews drill fleet

Amidst lacklustre global commodity prices Zambia’s largest copper mine, Kansanshi, has opted to renew its fleet of blast hole drill rigs with more efficient and reliable Sandvik D25KS and DP1500i drill rigs.

In the face of tough times in the Zambian copper mining industry, Rob McMaster, key account manager for First Quantum Minerals Sandvik Zambia says, mining contractor, First Quantum Mining & Operations (FQMO), have taken a progressive step to ensure improved efficiency and reliable production by renewing their DR500 fleet with Sandvik D25KS and DP1500i drills that are easier to maintain and operate on site.

He adds that Sandvik has entered into a buy-back agreement with FQMO to trade in the company’s 11 Sandvik DR500 series fleet that are used for blast hole and pre-split drilling in preference for the 9 new Sandvik D25KS rigs and 4 new Sandvik DP1500i rigs. The bundled deal makes the transaction more affordable and is in-line with FQMO’s overall objectives.

Efficient production

“We work closely with our customers to ensure operations are run optimally at all times. When circumstances change and a mine’s requirements are altered along with it, then we do our utmost to restructure equipment and fleets in such a way that the customer’s new needs are met. This is precisely what we have done at Kansanshi where we are proud to deliver a solution that is tailored to Kansanshi’s current and changing future requirements. The new Sandvik D25KS and DP1500i drill rigs are machines that will require less maintenance and specialised care than the predecessors.”

“They are also hardworking and well-suited to the current conditions in the mine, so are expected to deliver many years of reliable service with the highest levels of availability throughout as have the previously supplied D45KS, D25KS and DP1500i drills. FQMO has a fleet of 30 drills and the new Sandvik D25KS & DP1500i drills are required to assist with the high production requirements.

“They will be joining a number of other Sandvik D25KS drill rigs, as well as the larger Sandvik D45KS and Sandvik DP1500i top hammer drills. The standardisation will in many ways simplify maintenance, stock holdings of spares, rock tools and parts to make the operation easier to manage,” McMaster says.

FQMO’s manager optimisation drill & blast James Bravery was the direct link for the deal and through numerous discussions and negotiations we came to an agreed solution which is the result of this buy back agreement, McMaster says.

About the D25KS rig

Thanks to its compact size, proven design and durable power groups, the Sandvik D25KS blast hole drill is a very stable and highly manoeuvrable surface drill for surface mining and large-scale quarrying.

It’s a down-the-hole (DTH) hammer drill with a high pressure air compressor, air-line lubricator and fine feed control. It is commonly used in large mining operations globally with a choice of hole sizes from 127 mm to 172 mm (5” to 6 ¾”). It is also the drill of choice among many contractors due to its efficiency and extreme reliability on difficult grades.

One of the biggest selling points is its speed and fast set-up with effective pipe handling of 9.14m length pipes with pipe sizes in diameters ranging from 89 -140 mm. Pipe loading is controlled from the operator’s cab with the effective handling of drill pipe contributing to shorter cycle times and getting more holes drilled.

About the DP1500i rig

The Sandvik DP1500i is an intelligent, self-propelled, self-contained, crawler based surface drilling rig equipped with a cabin, movable boom and a rod changer. It is perfect for production drilling in large quarries or open pit mines and construction work sites. It is also well suited for wall control (pre-split drilling) and development works. The rig can be customised to meet special customer requirements.

Investing for the future

The Sandvik D25KS and DP1500i machines will be required to work up 5000 hours per year and in the well-maintained environment of Kansanshi the rigs will see service for many years. “This deal underscores our willingness to work with mines to ensure that they have appropriate equipment at all times that are able to deal with their changing requirements. While a number of underground mines in Zambia have shut down or gone into managed care the surface mines in the North West copper-belt are faring better. Moves such as the drill rig fleet renewal at Kansanshi to more efficient varieties are a positive step and an investment in the future of the mines,” McMaster concludes.

Source: MQWorld

Lusaka Stock Exchange posts increased turnover

OF THE total K98.6 million turnover recorded in 11companies on the Lusaka Stock Exchange last week, Metal Fabricators of Zambia (ZAMEFA) contributed a huge chunk of over K98.4 million.

Last week, the local bourse recorded a total of 20,493,324 shares transacted in eight trades, resulting in a market turnover of K98, 602,194.

This is in comparison with a total of 222,530 shares which were transacted in 38 trades, resulting in a market turnover of K274, 453 the previous week, according to the LuSE weekly news update availed to the Daily Mail on Monday.

“Of the total K98, 602,194 turnover last week, ZAMEFA accounted for K98, 439, 858. During the week under review, LuSE recorded trade in 11 firms compared to nine the previous week,” the report reads.

Other firms that recorded activity apart from ZAMEFA, are Zambia Sugar accounted for K40, 349 followed by African Explosives Limited Zambia (AELZ), which stood at K37, 895 and Zambian Breweries at K24, 800.

Among other firms which recorded trading were Airtel, Lafarge, Madison Finance Services and Zambeef Products.
On price share changes, AELZ and British American Tobacco Zambia recorded losses of K1.71 and K1.40 respectively and Standard Chartered Zambia registered a drop of K0.03, while both Copper belt Energy Corporation and Puma share prices dropped by K0.02.

Meanwhile, the LuSE all share-index closed at 4,401.43 points, a decline of 2.30 percent from the previous close of 4,504.83 points.

During the week under review, bonds valued at K783, 000 changed hands in four transactions, yielding market value sales of K687, 000 compared to bonds valued at K1, 531,000 changed hands in a two transactions, yielding market value sales of K1, 032,000 the previous week.

On market capitalisation, the market closed K58.8 billion translating to a marginal reduction from K59.5 billion the previous week.

Source: Daily Mail

Power affects FQM copper production in Zambia

Insufficient power at First Quantum Minerals (FQM) mine in the North-Western Province of Zambia, a mineral-rich Southern African country has resulted in reduced copper production, according to sources Thursday.

Dependent upon diesel-driven power plants which supply almost 200MW of electricity to the FQM mining operation at Kalumbila, almost 120 kilometers west of Solwezi the provincial capital needs an extra 30 percent for it to operate at full capacity.

The mine needs to tap power from the national grid of the state-run Zambia Electricity Supply Corporation (ZESCO) after FQM built a 600 kilometer power line from Southern Province through Central Province of that country. It is not yet known when the public utility firm will connect the mine.

At the moment from the time operations at the mine started in September 2015 copper production has been pegged at 150,000 metric tons per year and this is expected to reach 300,000 mt/y as from 2017. Both plated copper and concentrates production is expected to increase further once electricity from the national grid is accessed.

Kalumbila mine as it is known took FQM five years to put together as part of its US$2.1 billion Sentinel investment to that country’s mining sector. The mining company has since installed high cost machinery using one of the most sophisticated technologies in the world for the extraction of low grade concentrates with a 0.5% copper content.

However Sentinel’s contribution to overall copper production in that mineral-rich rural province is quite significant. At 500,000 mt/y North-Western Province is currently the largest copper producer accounting for 70% of the 711,000 mt/y produced in the entire country. Zambia stands as the second largest copper producer in the world.

Source: Mining.com

Copper output to soar

ZAMBIA’S copper production is expected to increase to over 740,000 tonnes, representing a five percent growth this year, due to enhanced production by new mines such as Kalumbila Mines.

Other contributing projects are plans by Glencore to invest over US$1.1 billion over the next three years to expand operations at its Mopani in the mining sector.

A latest report by the Institute of International Finance (IIF), which is a global association of the financial industry titled ‘Zambia buffeted from all sides’, predicts that copper output will rise from 710,560 tonnes to 746,000 tonnes.

“The official target for copper production is about 1.5 metric tonnes per annum by 2017. However, this is deemed overambitious by the IIF given electricity constraints, sluggish global demand and low prices. Despite these constraints, the IIF expects copper production in Zambia to rise steadily over the next few years.

“The current account deficit is forecasted to narrow this year and next year as copper production rises, and especially if prices edge higher,” the report indicates.

Currently, copper price on the global market is below US$4,700 a tonne.

The report also covers topics such as copper mining, including copper prices and production, mining taxation and its effect on the Zambian investment climate, power generation and its impact on companies and the economy.

Other topics include the performance of the Kwacha against other currencies depreciation rates and outlook monetary and fiscal policy of Zambia, particularly, the stance of the budget deficit, risks and opportunities in Zambia, including the sectors with the highest potential in the country.

Over the longer term, the Zambian economy has significant potential due to its rich natural resource base and track record of pro-market policies and democratic stability.

Source: Daily Mail

Kwacha in remarkable comeback

THE Kwacha at the weekend made a remarkable comeback against the US dollar on the back of increased dollar supply on Interbank, especially from offshore investors who were looking to participate in the local bond auction.

According to Cavmont Bank Zambia daily market report, the local unit began trading at K9.950 / K10.000, but was later seen being quoted at K9.800 / K9.850 by early afternoon.

The Kwacha closed the week at K9.700 / K9.750, 2.51 percent stronger than the day’s opening levels.

On money market, the bank reported that commercial banks’ aggregate current account balance increased by K51.48 million to K926.76 million while the overnight borrowing and lending rate increased by 0.11 percent to 18.27 percent.

Total funds traded on Interbank were K123.30 million.

The Central Bank was still conducting Open Market Operations (OMO) and was looking to reduce liquidity by K300 million.

The average accepted rate was 11.3 percent on the 1 day term deposit.

On the international scene the bank reported that the price of copper remained depressed as it posted a further drop of US$12.00 to drive the selling price of the red metal to US$4,639.00 a tonne.

However the price of gold made a slight recovery after it went up by US$2.94 to push the trading price of the metal to US$1,326.75 an ounce.

The bank further reported that the price of Brent crude oil also went up by a marginal US$0.42 and the commodity was now selling at US$49.33 a barrel.

Meanwhile, the Lusaka Stock Exchange (LuSE) says a total of 20,436,767 shares were transacted in 8 trades, resulting in a market turnover of K98, 450,886.

According to its daily commentary, trading occurred in CEC, MFIN, PUMA and ZAMEFA.

The LuSE All Share Index (LASI) maintained the previous close of 4,401.43 points as there were no share price movements.

The market capitalization remained at K58, 813,647,690 including Shoprite Holdings and K24, 574,441,710 excluding Shoprite Holdings.

Source: Zambia Daily Nation

Analysis on copper mining trends in Zambia

Copper production in Zambia, a mineral-rich Southern African country may not reach the projected two million metric tons at the close of this year after all because of a number of factors, not least the continuing drop in prices of the red metal on the international market, according to sources Tuesday.

However the Institute of International Finances (IIF) predicts that copper output will reach 740,000 metric tons this year citing operations on the Copperbelt and the North-Western Province as being behind the projected increase. But fears that continued load shedding, sluggish global demand and low copper prices may hound the anticipated increase.

The institute has predicted that copper production due to First Quantum (FQM’s) Sentinel-Kalumbila project in the North-Western Province will push up production from 710,560 mt/y to 746,000 mt/y. Official copper tonnage has been put at 1.5 million metric tons. It further anticipates copper prices to rise steadily over the next few years.

All the same the fall in copper prices on the London Metal Exchange (LME) from the near all-time high of US$10,000 per tonne in 2011 to less than $5,000 this year has had an adverse effect on the general operations of the foreign-owned mining companies in that country resulting in reduced production of the metal.

Major mining firms such as FQM, Vedanta Mineral Resources plc, Glencore and others have been forced to scale down on their operations because of the same downward trend of copper prices on the world market. This has in turn seen a reduction in their labor force with thousands of workers being laid-off.

However despite the volatile market situation mining companies have continued to invest in the minerals sector of that landlocked African country while taking several measures to cut down on obvious production costs which unfortunately has culminated in the slicing off excess labour.

Not only that many mining companies have resorted to the use of state-of-the-art technology in the extraction and processing of copper products as a way of improving on efficiency in order to optimise mineral production from their operations.

According to Vedanta’s Konkola Copper Mines (KCM) vice president for local economic development Mr David Paterson cost reduction measures and the application of of modern technology have helped to increase copper production at the mining company’s operations on the Copperbelt.

“Cost-cutting measures have in a way helped to increase copper ore production at various KCM operations,” Paterson stated. He particularly pointed at the new business strategy which the Vedanta mining subsidiary put in place as being the cause for the improved copper output at the moment.

So far KCM, as one of the major mining outfits in Zambia after employing one of the best modern technologies in the world has seen its production costs go down by 15-18% while copper ore production has increased by another 5-7% in the past two years from 60,000 mt/y in the 2014/2015 period to 70,000 mt as at now.

In any case the Konkola Deep Mine Project (KDMP) located in Chililabombwe on the Copperbelt and on the border with the Democratic Republic of Congo is a key mining town which is a major contributing factor to the increased copper production at the mining company.

Sunk at a cost of $600 million ten years ago the 1.5 kilometer deep shaft has an annual capacity of 8 million tonnes and has an estimated lifespan of fifty years from the time it became operational in 2014.

Vedanta of India listed in London has since invested $3 billion in Zambia’s copper industry from the time it bought off the mining operations on the Copperbelt in 2004 at about $25 million and has since made super profits while paying less taxes, the source of ongoing wrangles with the government which has even sued it to the high court in London for non-payment of taxes amounting to $100 million.

The other foreign mining giants Glencore which owns Mopani Copper Mines (MCM), China Non-Ferrous Mining Corporation (CNMC) on the Copperbelt and FQM in the North-Western Province have all made huge investments in the mining sector of Zambia totaling more than $6 billion.

Hence the mining operations of these mining firms in the two provinces are responsible for the expected increase in copper production in Zambia. the investment of the same mining companies which stretch way back to the year 2000 up to 2014 is expected to convert into profitable and sustainable venture at the turn of 2020 and beyond.

Foreign mining companies in Zambia continue to face an uncertain future as government pandering to political pressure from its citizens and the opposition has failed to come up with a definite and acceptable mining policy, more especially on the tax regime which keeps changing with time.

For instance at the beginning of 2015 copper mining almost came to as standstill when government tried to arbitrarily increase mining taxes from 6% to 20% for open-cast mines and 8% for underground operations. All the foreign mining firms rejected the increases citing insufficient power, high oil prices, huge labour force and other costs which ate up their profits.

Just as government threatened to withdraw the licences of mining firms which refused to pay the increased taxes so did the mining companies threaten to stop their mining activities. The stalemate however did not continue for long.

In order to save whatever income it derived from mining and minerals taxes and also the sustenance of workers on the mines, the revenue for local contractors and suppliers the government was forced to concede and came up with a revised variable tax of 3-9%. But then talks are ongoing on the matter.

The Zambian government has since proposed to implement a 3-6% band for both floor and ceiling tax rates pegged to the value of the minerals on the LME. But then this sounds almost like returning to the windfall tax which was abandoned in 2009 at the insistence of foreign mining companies.

Commenting on the proposed tax bands chief executive officer of the state-owned Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) Mr Pius Kasolo said it will help to remove the mineral revenue sharing mechanism as demanded my the Mines and Minerals Act of 2015 which imposed 6% tax for underground operations and another 9% for open-cast mines.

Kasolo hoped that mining firms have slept over the issue so that when the new administration comes into place after the ongoing court petitions following a stormy and violent general election on August 11 will come to terms on the matter. “We hope the new proposed taxes will be acceptable to the mining companies,” he said.

So far the Zambia Chamber of Mines (ZCM) has also supported the new proposed taxes after recognising the need to balance increased tax revenue with continued employment and investment for new mining ventures, according to its official Mr Nathan Chishimba.

On the contrary some Non-Governmental Organisations and Civil Society Organisations still feel the government proposed taxes are too low and are investor-led which will not help to maximise revenue from the mining and minerals sector of the country. They strongly feel government should collect most of its revenue from the mining firms during the time of commodity boom.

The organisations together with some unions and the opposition who have always favoured a return to the windfall tax regime which is higher than what the foreign mining companies are demanding and they want higher taxes slapped on the mines. The fact that foreign mining firms have invested so much in the mining sector means they are aware of its profitability.

Officials with the Zambia Tax Platform believe that one cannot separate mining tax revenue from mining investment. To them it is mining investment which should determine the tax threshold and strongly feel the present taxes being levied on the mines are just too low and not sufficient to maximise on revenue from the sector in time of high commodity prices. “A good tax regime is one which balances between two competing interests, in this case the government and mining firms,” an official said.

Despite many issues surrounding the mining sector Zambia continues to be the second largest copper producer in the world. But with more than 68% of the population living in abject poverty and with copper for the past fifty-two years accounting for 75-80% of the total export and foreign exchange earnings the mining and minerals taxes is quite an emotional issue which needs to be handled with a lot of care.

Source: Mining.com

ZCCM Investments Holdings Plc Interacts with Japanese Companies in the Power Sector at the just ended TICAD SUMMIT

ZCCM Investments Holdings Plc (ZCCM-IH) invited by the Zambia Development Agency (ZDA) to be part of the Zambian delegation, attended the 6th Tokyo International Conference for African Development (TICAD) Summit held in Nairobi, Kenya from 26th to 28th August 2016.

During the Summit, ZCCM-IH represented by the Chief Executive Officer Dr Pius Kasolo and Portfolio Analyst Tapiwa Msusa, made interactions with Japanese companies involved the power sector.

Sumitomo Corporation was one of the Companies that held talks with ZCCM-IH in a bid to forge future relationships regarding investments in the power sector in Zambia.

The Summit was opened by President Uhuru Kenyatta of Kenya. In his speech, Mr Kenyatta underlined that Africa has benefited a great deal from Japan’s grants, loans and technical co-operation in several sectors such as education, infrastructure and agriculture, across the continent.

He also pointed out that current Japanese Official Development Assistance in Africa which currently stands at US$ 32 billion, is a substantial contribution to the continent’s development.

The President of the African Development Bank, Dr. Akinwumi Adesina, cited that Africa no longer required so much of ‘aid’ but was now ripe for investment.

During the summit, the ZDA signed memorandums of understanding (MOUs) with Mizuho Financial Group (MHFG) of Japan and Kenya Investment (KenInvest) of Kenya with the aim of promoting investment co-operation and identifying suitable investment opportunities, and enhance trade opportunities and information exchange, respectively.

ZCCM-IH’s Dr. Kasolo was privileged to witness the signing ceremonies alongside The Permanent Secretary in the Ministry of Commerce, Trade and Industry, Mrs Kayula Siame.

Further, the Industrial Development Corporation (IDC) which owns 60.28% shares of ZCCM-IH also signed a memorandum of understanding with Marubeni Corporation of Japan.

The MOU is aimed at the rehabilitation of Mulungushi Textiles Limited in Kabwe, which was recently commissioned by Zambia’s President, Mr. Edgar Chagwa Lungu.

It is the first time that the 6th TICAD summit is held on the African continent. It attracted just over 35 Heads of State, mostly from Africa, along with the Japanese Prime Minister, Mr. Shinzo Abe. Over 90 Japanese companies were in attendance.

Other African countries present included South Africa, Djibouti, Guinea, Zimbabwe, Somalia, Ivory Coast, Uganda, Mozambique and Togo amongst others.

The TICAD Summit offers a platform for African and Japanese business leaders to interact and share business ideas on the premise that the private sector and its collective entrepreneurial mind-set will be key to delivering economic transformation on the African continent.

The goal of such an event is to promote the formation of co-operative partnerships between Japanese and African businesses, with both parties seeking to drive industrialization and diversification on the African continent.

Power sales to DRC trigger CEC profit to over K270 million

COPPERBELT Energy Corporation (CEC) Plc has registered a profit of about 18 percent profit due to increased power sales to the Democratic Republic of Congo (DRC), earning over K270 million.

In its summary of unaudited results for six months ended June 30, 2016, the company has continued to influence the electricity market through its network on behalf of Zesco Limited on the Copperbelt, and to operate an interconnector with the DRC.

“The Zambian businesses on consolidated basis posted a profit of K275 million (US$25.9 million) compared to K225 million for the previous.
“Revenue at half year increased by 40 percent from K2.252 million to K3.776 million. This is mainly on account of increased power sales to the DRC mines. Net loss of K1.669 million compared to a net loss of K571 million the previous period,” the report reads.

The company attributes net loss mainly to an exchange loss of K1.140 million (US$107 million) arising from the devaluation of the naira on dollar borrowing and bad debt provision of K516 million (US$52 million).

On performance update, the report says the macroeconomic environment in Nigeria has continued to pose some challenges to the group’s operations as well as low commodity prices which had a negative impact on customers’ liquidity and ability to meet their financial obligations.
Other challenges relating to low commodity prices on the global market have led to some of the customers scaling back on their operations with the effect on the company’s power sales dropping by about 16 percent in Zambia.

The company expects higher demand to return mid to end of 2017 when most of the customers begin to draw power to implement their projects.
“Operationally on the Zambian end, the business continued to operate under the partial force majeure under the bulk supply agreement with our main power supplier and the respective power supply agreements with our mine customers.

“This entails that we can only access 70 percent of our power requirements from Zambian sources while the rest of our requirements have to be sourced outside of the country. It is expected that this regime will continue until year end,” it says.

Source: Daily Mail

CEC posts 275 million in profits despite challenging business environment

The Copperbelt Energy Corporation has posted a profit of K275 million in the first six months of 2016, up from K225 million record for the previous period.

The increase in profits is mainly attributed to increased power sales to the DRC mines and increased sales at its telecoms unit.

Revenue at half year increased by 40% from K2.252 million to K3.776 million.

This is mainly on account of increased power sales to the DRC mines.

This is according to the company’s half year financial results released yesterday.

CEC however recorded a net loss of K1.669 million compared to a net loss of k571 million the previous period.

“Net loss is mainly attributed to an exchange loss of ZMW1.140 million arising from the devaluation of the Naira on USD borrowing and bad debt provision of K516 million,” it said.

In March 2016, the Company paid a total of K163 million in dividends.

“The macroeconomic environment in Nigeria continued to pose some challenges to the Group’s operations as well as low commodity prices which impact on our customers’ liquidity and ability to meet their financial obligations. The depreciating Naira resulted in increased foreign exchange risk, translating into a loss of K1.140 million,” it said.

“Operationally on the Zambian end, the business continued to operate under the partial force majeure under the Bulk Supply Agreement with our main power supplier and the respective Power Supply Agreements with our mine customers. This entails that we can only access 70% of our power requirements from Zambian sources while the rest of our requirements have to be sourced outside of the country.”

The company said it is expected that this regime will continue until year end.

“The challenges relating to low commodity prices on the global market have led to some of our customers scaling back on their operations with the effect.

Source: Lusaka Times

CEC records K1.1 Million loss

COPPERBELT Energy Corporation (CEC) has said the macro-economic environment in Nigeria and the depreciating Naira has increased foreign exchange risks resulting in the loss of K1.140 million.

This is according to CEC’s summary consolidated unaudited results for the period ended June 30, 2016 made available to the Times yesterday.

The company said the macro-economic environment in Nigeria continued posing some challenges to the group’s operations as well as commodity prices which impacted on its customers’ liquidity and ability to meet financial obligations.

“The depreciating Naira resulted in increased foreign exchange risks translating into a loss of K1.140 million,” it stated.

Operationally on the Zambian end, the statement said the business in the stated period continued to operate on partial force majeure under the bulk supply agreement with its main power supplier and power supply agreements with mine customers.

“This entails that we can only access 70 per cent of our power requirements from Zambian sources while the rest of our requirements had to be sourced outside the country.

The challenges relating to low commodity prices on the global market have led to some of its customers scaling back on their operations resulting in power sales dropping by 16 per cent.

The company expected high demand to return by mid to end of 2017 when the projects that a number of its customers have been implementing begin to use power.

Source: All Africa