FQM Redoubles Tree Planting Efforts for 2024

 

Source: Langmead & Baker

First Quantum CEO Inspects Progress of S3 Expansion at Kansanshi

The S3 expansion entails an expansion of the mine pit and the mining fleet that services it, as well as the construction of a new processing plant, and a major expansion of the Kansanshi smelter. The result will be to extend Kansanshi’s mine life as a world class asset into the 2040s, increase copper production to more than 200,000 tonnes a year while continuing to drive economic development and jobs in Zambia.

To ensure continuation of the S3 expansion in the face of disruption to its Cobre Panama mine in Panama, First Quantum has recently raised US$3.3 billion as part of a comprehensive refinancing package and a copper pre-payment arrangement. The company has also extended its debt facilities through to mid-2027, providing the pathway to deliver on its commitment to Zambia with the S3 expansion.  

Commenting after his site inspection, Mr Tristan Pascall, said he was pleased to see the level of progress on the ground at Kansanshi.

“It’s great to be at Kansanshi, and to see that the S3 development work is progressing on the ground according to plan. Kansanshi – and Zambia, in general – has been the mainstay of our mining activity for the last twenty years, and will be just as important to us for the next twenty. We’ve had to adapt ourselves to unforeseen circumstances over the last few months, but we’ve met challenges before, always finding a way through and coming out stronger. Completing the S3 expansion on schedule is a priority for us, and the actions we have taken recently puts us in a strong position to do just that. I look forward to my next visit here, to see this project through to its completion.”

 

Source: Langmead & Baker

FQM Welcomes Export Proceeds Framework

Source: Langmead & Baker

FQM’s Kansanshi mine hands over K1.2m cheques to six Solwezi cooperatives

First Quantum Minerals’ Kansanshi Mining PLC has handed over cheques amounting to K 1.2 million to six cooperatives engaged in various business activities, each receiving K 200,000 in a continued effort to support and improve the welfare and livelihood of communities in Solwezi.

The mining firm is alive of the fact that Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in rural communities, however, access to finance is a key constraint to SME growth, and it is one of the most cited obstacles that they are faced with.

The additional funding of K 1.2 million follows the initial K 756,000 given to the six groups in February earlier this year, with each having received K 126,000 to help kick-start their business activities around the District.

Read full article 

Source : Mining News Zambia

FQM consolidates its Kansanshi mining operations in readiness for the S3 expansion

First Quantum Minerals will consolidate the Road and Earthworks Division, Mining Divisions and related supporting services currently carried out by First Quantum Mining Operations Limited (FQMO) with the operations at Kansanshi Mining Plc (KMP).

FQMO was the original First Quantum Minerals corporate entity in Zambia which operated the Bwana Mkubwa mine. Following the expansion of the First Quantum operations in Zambia, with both the Kansanshi and Sentinel mines, FQMO evolved to house a wide range of business functions to support these operations including mining, road and earthworks, exploration, corporate services, CSR, community health and other services….

 

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Source: Lusaka Times

Accelovant Deploys Fiber-Optic Sensors to Improve Efficiencies at Kansanshi Copper Mine

Sensors installed in “smokestack scrubbers” dramatically reduce plant downtime, enabling processing at higher capacities and facilitating automated control.

NORTH VANCOUVER, BC / ACCESSWIRE / April 13, 2023 / Accelovant, an innovative developer of fiber-optic sensing solutions for semiconductor, industrial, IoT, manufacturing, and power distribution markets, announced the deployment of its fiber-optic temperature sensors at Kansanshi Mining PLC, a First Quantum-owned company located in Zambia, and one of the world’s largest and most productive copper mining and smelting sites. The Accelovant sensors replaced older technology devices that were highly prone to failure under the extreme operating conditions within the wet electrostatic precipitators (ESP) utilized to scrub dangerous toxins and pollutants from gas streams generated in the copper smelting process.

“Accelovant specializes in high-temperature fiber-optic sensors which are also immune to electrical noise and interference,” said Michael Goldstein, chief executive officer for Accelovant. “Our patented Kristonium material has created a new class of fiber-optic temperature sensors that offer long service life at temperatures exceeding 450 degrees Celsius. In systems like the ESPs at the Kansanshi mines, the sensors replaced electrical devices that could not survive the harsh high voltage and electrical noise environment.”

To operate at peak efficiency, the plant must maintain precise temperature levels between 325 and 340 degrees Celsius through the use of in-stream sensors. This is a challenge in the harsh operating environment surrounding the wet ESPs (high voltage, electrical noise, and high temperature).

Pieter Oosthuizen, control instrumentation superintendent at the Kansanshi plant, noted that the ESP units operate with a typical 45 kilovolt charge. “In this kind of environment, there is tremendous electromagnetic noise and induced currents in anything that is conductive or that utilizes electronics. We tried many different sensor types, but in all cases the electronics would burn out and fail due to the stray electromagnetic fields – until we installed the Accelovant sensors.”

 

Read more: Bloomberg

ZCCM-IH Shareholders Approve the Kansanshi Royalty Transaction

3rd April 2023, Kitwe, Zambia: ZCCM Investments Holdings Plc (ZCCM-IH) shareholders have approved the Kansanshi royalty conversion where the Company will now receive 3.1% of Kansanshi Mining Plc’s (Kansanshi) total revenue. The royalty revenue will be paid on a quarterly basis over the entire life of the mine of Kansanshi that currently extends to the year 2045.
 
The approval was given at the Shareholder’s Extraordinary General Meeting (EGM) held in Kitwe on 31st March 2023. The royalty income stream replaces the former model of unpredictable and unguaranteed dividend pay-outs. These were made at the discretion of the Board and were dependent on company profitability. Instead, a royalty is predictable and guaranteed as it will be charged at 3.1% of the company’s total revenue (from sales of Copper, Gold, and all other metal products) as per the Royalty Agreement. This therefore guarantees a steady income stream for ZCCM-IH, as long as there is production at Kansanshi.
 

ZCCM-IH Board Chairperson Ms. Dolika Banda says that this will result in a far healthier cash flow for ZCCM-IH which will in turn make it far easier for the Company to raise financing pursue its ambitious investment strategy. 

Ms. Banda further states that “the royalty arrangement will give us consistent and stable income, and fundamentally will change the financial health of ZCCM-IH by so doing. Our ambition is to make investments throughout the mining value chain – from exploration, through to value addition – so that we may help to create national economic success stories for the benefit of all Zambians; and for our shareholders, value creation and a return on their investment.”

A comparison of actual dividends received from Kansanshi since 2009 with estimates for future royalty rates shows that not only will overall revenue be far greater under the royalty model – but the revenue flow is also more predictable and consistent.

In addition, a royalty will see ZCCM-IH benefit from future high copper prices, in the likely event of a price recovery from recent market turmoil. It also affords protection from the worst of any future price slump as it is paid on production, not profitability. If Kansanshi is in production and earning revenues, a royalty will be paid – even if the mine is then producing at a loss.

ZCCM-IH will continue to hold 20% of the shares in Kansanshi Mining Plc, retain 2 out of 10 board seats, and thus continue to participate in the governance of Kansanshi and having full visibility of Kansanshi operations.

The completion of the Royalty Transaction follows extended discussions over the past three (3) years between First Quantum Minerals (FQM) and ZCCM-IH.

 

 

End

 
 
Issued by:
 
ORIGINAL SIGNED
 
Loisa Mbatha
Corporate Affairs Manager
ZCCM Investments Holdings Plc
 
 
NOTE TO THE EDITOR:
 
Summary of Some Key Terms of the Transaction
 
  • Key Terms:
    1. Dividend: Payable depending on satisfactory performance of a company and is at the discretion of the Board of Directors. Relies on company profitability.
    2. Royalty: Charged as a percentage of the amount of minerals produced and sold over a specified period, at the market price. Paid irrespective of profitability.

 

  • Equity Interest:
  • Retention of 20% Class A shares with varied rights.
  • Retain two Board seats on Kansanshi Board to ensure visibility into the operations of the Company. 

 

  • Royalty:
  • The grant of a life of mine royalty to ZCCM-IH in respect of the gross value of all metal products to be extracted from the Kansanshi mine as per the Royalty Agreement to be executed on the Transaction closing date.
  • 3.1% of the Gross Value of all Metal Products extracted from the Royalty Area 
  • Royalty based on the Gross Value of Royalty Products (Copper, Gold, and all other metal products) sold or otherwise extracted at Kansanshi.
  • Royalty will be quarterly payments for the entire Life of Mine of Kansanshi.
  • Replaces dividend payment.

 

  • VAT Refunds:
  • Kansanshi will pay ZCCM-IH 20% of all VAT refunds receivable, on receipt of refunds from ZRA, up to the effective date of the Royalty Agreement.

Kansanshi agreement is a neat solution to a historical problem: All shareholders in Kansanshi are now incentivised towards maximising production – Prof. Oliver Saasa

CCM-IH’s recently announced decision to move from a dividend model to a revenue-sharing model has been both praised and criticised in the media but, concerningly, the rationale and details appear to be widely misunderstood. Mining For Zambia asked renowned economist Professor Oliver Saasa to shine a light on this agreement, which has been three years in the making.

There has been a significant amount of commentary in the media on the Kansanshi agreement since it was announced earlier this month. Has this surprised you?

I personally believe that the interest Zambians have shown in this deal is healthy. Citizens are interested in understanding – and even questioning – the reasoning behind decisions that have consequences for the larger economy. So, it is essential that the public is properly informed about the intricacies and technical details of this agreement, to ensure that people’s opinions are founded on facts – and not on fiction. What the commentators are asking is pertinent: ‘Whose idea was this transaction? How did it come about?’ For those that have followed its genesis, it’s clear that both ZCCM-IH and First Quantum [FQM] have wanted a change, and feel that the dividend model is no longer fit for purpose for either party.

What do you understand to be the rationale behind ZCCM-IHs desire to convert its dividend rights in Kansanshi into royalty rights? Or, put differently, whats in this deal for ZCCM-IH, as you see it?

As ZCCM-IH has explained publicly, a review of its portfolios performance in 2019 revealed that the dividend model had not been maximising shareholder value because it was not delivering predictable revenues. For this reason, pursuing alternative revenue streams became a focus in its subsequent Strategic Plan, for 2020-2026. Securing consistent revenue flows from its investment portfolio (via royalties) is a solution that addresses the unpredictability of dividend payments, which were not serving ZCCM-IH’s interests.

 

Read more: https://miningforzambia.com/saasa-kansanshi-agreement-neat-solution-historical-problem/

3.1% ZCCM-IH Revenue Royalty Model with Kansanshi Copper Mine is a good deal for Zambia – Watson Lumba

A Local Economist has dispelled assertions that the ZCCM-IH sold its 20 percent shareholding in the First Quantum Mine owned Kansanshi Copper mine of Solwezi and advised Zambians to avoid politicizing matters bordering on national wealth creation.

Watson Lumba stated that it is unfortunate that Zambians are finding comfort in politicizing everything and anything, a trait he cites to have potential to plunge the nation into a crisis especially when it borders on the economy and wealth creation.

Mr Lumba who was speaking when he appeared on Tuesday’s edition of Let the People Talk programme on Radio Phoenix said there is no way ZCCM-IH could sell its shares and still remain on the board with voting rights adding that people must stop politicizing good policies.

He noted that the decision by ZCCM-IH to forgo its dividend royalty in preference for the revenue royalty model of 3.1% is a good move that allows the investment holdings which only has 20% share holding in the mine to receive its share regardless of the status of the mining company instead of waiting for profit dividends which are not guaranteed.

“It is not true to say ZCCM-IH has sold its interest in the mine. What is true however is that the investment holdings still have a stake in the mine, and it will receive its money which will be calculated according to sales and not profits as is the case with dividends. Mind you, ZCCM-IH with its 20% shareholding in the mine had very little say despite having voting rights as the other shareholders have more than 50 +1 % giving them the ultimate decision making power. But under the new model, whatever decisions the majority shareholders make will not affect ZCCM-IH and its money as it is guaranteed through sales,” Mr Lumba explained

He further explained that the revenue royalties will ensure the stability of revenue inflow into ZCCM-IH coffers because it is based on the gross value of production as opposed to dividends which are centered on profit and added that the production value is less volatile than the profit value because of the cost element in the latter and the fluidity of the dividend policy that is at play.

Mr Lumba further disputed assertions from especially members of the opposition political parties that the government and the people stand to lose under the revenue royalty despite being the owners of the mine.

“Let us separate the two. The government on behalf of the people of Zambia owns the land and the minerals underneath the land but is not engaged in any form of production and does not incur any costs. Because of that, the government is getting the mineral royalty tax by virtue of it owning the land and minerals underneath. Then we have ZCCM –IH which sits as a shareholder on the board with voting rights but with no or less power to change any decision,” he said

“Under this arrangement, ZCCM –IH was only told what the major shareholders had planned to do with the profits and could do nothing other than take the company to court if not satisfied with the majority decision which was a cost on both entities. But under the revenue royalty model, ZCCM –IH will get its money according to the sales and will not be bothered by any investment decisions by the majority shareholder. The more they invest, the better for ZCCM –IH as it is assured of an increase in returns on its 3.1% royalty. This is a good deal. Let us just not politicize economic policies as that will affect the growth of our economy,” he added

Source: Lusaka Times

New Zambian regime: The key to FQM’s Kansanshi expansion

TSX-listed mining major First Quantum Minerals (FQM) is looking to invest substantially in the expansion of its Kansanshi copper and gold mine.

This demonstrates not only the ongoing interest in these two metals from global markets but also the company’s commitment to a country which has recently welcomed a new political regime of leaders who are looking to increase Zambia’s mining investment profile moving forward. Dr GODWIN BEENE, FQM government relations affairs specialist tells LAURA CORNISH.

Zambia’s mining tax regime, amended in 2019, has seen investment from the sector dwindle and total copper production output stagnate ever since. But the introduction of new president Hakainde Hichilema (appointed into office in September 2021) could change this as he has reopened the door to working with local mining companies to establish a more investment-friendly tax regime.

This could be one of the key deciding factors that will enable the FQM board to give the green light on a major expansion project at its Kansanshi operations.

“Regardless of the regular policy changes that have occurred in Zambia, FQM has built a solid operating base in the country, and we’ve continued to deliver significant volumes of copper from both Kansanshi and Sentinel – which together are responsible for producing more than half of Zambia’s total copper output. Kansanshi is also the largest gold producer in the country,” Beene starts.

In 2021 Kansanshi produced 202 000 t of copper and 128 000 oz of gold while Sentinel produced 233 000 t of copper (with a record last quarter contributing to this number).

Kansanshi

Situated in Solwezi in the north-western province of Zambia, Kansanshi has been producing copper and gold since 2005 and has undergone numerous expansions since then. It is FQM’s flagship operation, globally. “The mine however has reached a point where most of its high-grade resources have been depleted,” Beene notes.

In 2021 the mine’s copper production was 9% lower than the previous year, mainly due to lower grades in the mixed and oxide circuits, coupled with lower oxide recovery and 3% lower throughput, which was also the result of unplanned maintenance and processing of competent mixed ore.

2022 is expected to maintain similar volumes to those achieved in 2021 – of between 190 000 and 210 000 t of copper (and a consistent 120 000 – 130 000 oz of gold). “Grades however are further expected to decline over the course of the year from the levels seen in the fourth quarter of 2021,” Beene notes.

The key to Kansanshi’s future lies in the potential introduction of an expansion project – known as the S3 Expansion – which is awaiting board approval. As the Kansanshi pits expand, the volume of near-surface high-grade oxide ore continues to decrease, whilst the proportion of primary sulphide ores increases with depth.

The US$900 million S3 Expansion is expected to transition Kansanshi away from the current, more selective high-grade medium scale operation to a medium-grade, much larger scale mining operation.

A NI 43-101 technical report filed in September 2020 includes the plan for a 25 Mtpa expansion of the sulphide ore processing facility, increasing annual throughput to 53 Mtpa. The expansion would also involve a new larger mining fleet and combined with the new standalone 25 Mtpa processing plant, is expected to create efficiencies and economies of scale. Most of the capital spend on the S3 Expansion is proposed for 2023 – 2024 if the project can obtain board approval. “As you can see, a decision around this project is imminent,” Beene confirms.

In parallel with the expansion of the mine and processing facilities, FQM plans to increase throughput capacity of its Kansanshi smelter from 1.38 Mtpa to 1.65 Mtpa. The capacity increase would be achieved partly through enhancing copper concentrate grades by lowering the carbon and pyrite content of the Kansanshi and Sentinel concentrate feeds and debottlenecking the gas handling circuit, including incorporating a new acid plant. Concentrate processing capacity is expected to be further expanded through modifications to the existing high-pressure leach circuit.

This expansion is also subject to board approval, linked to the investment conditions in Zambia.

In addition to increased capacity, the smelter expansion is expected to create greater flexibility should smelter capacity constraints in the Zambian Copperbelt arise, as well as reduce downstream Scope 3 GHG emissions from the transport and refining of copper concentrate at third party smelters.

“Discussions with the Zambian government remain in play and together we hope to achieve suitable measures to support the S3 Expansion. In doing so, we hope to see more internationally aligned, stable and consistent policies as well. Fortunately, the new administration is very approachable,” Beene notes.

“The nature of the ore body has a declining grade profile and a declining production profile consequently. This expansion would effectively offset the lower grades and allow copper production to remain stable, well above 200 000 t throughout most of its mine life, estimated in 2044,” he adds.

Sentinel

Constructed over four years from 2012, Sentinel represents $2.1 billion of investment – Zambia’s largest infrastructure investment since the Kariba Dam was constructed in 1959. This operation is a steady performer and in fact delivered its best quarterly production of the 2021 year with 60 197 t of copper produced – 9% above the comparable quarter in 2020 – assisted by soft ore treatment and utilisation of secondary crushing.

While copper production for the year ended December 2021 decreased by 7% compared to the previous year, reflecting lower throughput, grade and recovery, production in 2022 is expected to be between 260 000 and 280 000 t.

Grade is also expected to improve from 2021 levels as higher-grade ore is exposed in both the Stage 1 and Stage 2 pits. The focus will be on developing the pits to maintain consistent ore feed as well as supporting the successful commissioning and ramp up of the fourth in-pit crusher, which is already underway after completion of construction in December 2021.

The fourth in-pit crusher is expected to enable the plant to increase throughput to 62 Mtpa in 2022. “The Sentinel mine will continue to operate for another 14 to 20 years as very little additional resource is available in the area,” Beene notes. 12 km from the Sentinel mine is the Enterprise nickel project, which if approved by the First Quantum board, has the potential to be the largest nickel mine in Africa. While Enterprise is still subject to approval, it is also being actively discussed with the government of Zambia.

Discussing FQM’s outlook to replace these ounces in the long-term, Beene again reflects on Zambia’s policy. “We need a conducive environment that also encourages new exploration efforts; for example, allowing companies to conduct their own airborne surveys in order to find new targets and create new data sets would be a positive step in the right direction.”

 

Source: https://www.miningreview.com/base-metals/new-zambian-regime-the-key-to-fqms-kansanshi-expansion/