DECLINING copper price and global cost pressures have negatively impacted increased production at Kansanshi Mine following commissioning of sulphide circuit expansion at its plant in Solwezi.

While Kansanshi's operating profit during the nine months ending September 30, 2008 increased to U$731.1 million from last year's U$546 million, its operating profit for the third quarter dropped to U$199.3 million from U$222.3 million for the same period last year.

This is according to the First Quantum Minerals (FQM) operational and financial results for the three and nine months ended September 30, just released by company president, Clive Newall.

Mr Newall said Kansanshi's total cost of production was also significantly impacted by the introduction of the new Zambian tax regime, specifically for the windfall tax, export levy and royalties.

"Kansanshi copper production increased 30 per cent and the copper in concentrate inventory stockpile was reduced by over 2,000 tonnes resulting in a 31 per cent increase in tonnes of contained copper sold.

"However, operating profit was negatively impacted by a lower realised copper price and increased production costs resulting in a lower gross margin per pound of copper sold," he said.

Mr Newall said the sulphide circuit expansion, which began commissioning during the second quarter of this year, continued to ramp up to design throughput in the third quarter.

"This expansion allows for an annual throughput in excess of 12 million tonnes of ore and resulted in a 61 per cent increase in sulphide ore throughput over the third quarter in 2007 and a 70 per cent increase in copper in concentrate production," he said.

Ore grades processed in both the oxide and sulphide circuits remained relatively consistent between the comparative quarters, while the increase in mining equipment during the early part of 2008 allowed for increased waste stripping and a continued increase in the ore stockpiles.

Operations at the Mufulira smelter remained consistent with the second quarter as tolled cathode output was relatively similar, but down slightly from the third quarter of last year.

And Kansanshi's high pressure leach system (HPL) also remained consistent with the second quarter, contributing approximately 2,600 tonnes of copper in concentrate to cathode production.

"This was a 103 per cent increase over the third quarter in 2007 as the HPL was commissioned during that quarter.

"With the significant increase in copper in concentrate production and a lack of available smelter capacity, approximately 15,800 tonnes were sold without further processing," he said.

Meanwhile, Kansanshi public relations manager, Godfrey Msiska said in Solwezi during a stakeholders' meeting that the mine was putting in mitigating measures to the global cost pressures.

"We are looking at all areas before looking at employment levels. Cutting costs is not just about head count. We are looking at improving our efficiencies - trying to ride the tide through the crisis," he said.