7 November 2012

Zambia: KCM Sees Better Growth Prospects

ZAMBIA'S leading mining company, Konkola Copper Mine (KCM) is set to attain robust growth, raising production of copper to 400,000 tonnes per annum in the next few years after injecting a total of US2.5 billion capital investment in its mining operations.

Already, the country's biggest mining company has recorded a 23 per cent increase in copper production in the first half of the 2012/2013 financial year.

KCM chief executive officer Jeyakumar Janakaraj said a total of 200,000 tonnes of finished copper were produced during the 2011/2012 financial year.

He said that during the six-month period ended September 30, 2012, the company recorded 83,000 tonnes, which is about 23 per cent higher than the production posted in the same period during the last financial year.

"Copper production for the first half of the last financial year was 83,000 tonnes and the figure for the same period this year has increased by more than 23 per cent," he said.

This is attributed to the rise in copper output at Konkola and Nchanga mines.

The increase in copper output was as a result of the faster development works such as the installation of equipment at the Konkola Underground Mine's fourth shaft and the replacement of the Nchanga concentrator.

KCM is in the process of completing various projects that would see it raise finished copper production to the forecast 400,000 tonnes in the next few years.

The country's leading mine company has continued with the exploration of minerals in existing mining licence areas and seeking growth opportunities.

KCM's success story on the Zambian copper mining scene includes the undertaking of the Konkola Deep Mining Project (KDMP) at Konkola Underground Mine in Chililabombwe and the Upper Ore Body (UOB) project at Nchanga Underground Mine in Chingola.

Mr Janakaraj said KCM had so far invested more than $2.5 billion in upgrading and expanding its mines since 2004, apart from spending $80 million out of the $180 million required to develop the UOB, which extends Nchanga Underground Mine's lifespan for more than 25 years.

KCM has also spent more than $1 billion on developing KDMP, which has also increased Konkola Underground mine's lifespan by another 25 years.

KCM has also completed mechanical works installations at its flagship KDMP Shaft Four in Chililabombwe District, further boosting Konkola Mine's production.

KDMP project manager Billy Sakala said a major milestone was attained by installing the mechanised bottom shaft waste loading, hoisting conveying facility along with service cage facility for man and material travel up to the bottom shaft.

KDMP was formulated with the aim of transforming Konkola Mine's use of world class technology using optimal cost of operation and increasing the mine's daily copper production capacity to 7.5 tonnes.

Mr Sakala said: "Shaft Four mechanical works installation have been completed as per milesetone schedule of September 30, 2012 and the first trial load hoisting was carried out in the presence of an informal gathering."

The KDMP Shaft number four is the first shaft sinking project since independence in 1964. KCM has sunk the shaft to a depth of 1,505 metres.

Mr Sakala said copper mining at KDMP was currently being done at the depth of between 850 metres and 950 metres.

KCM operates underground and open pit mines as well as metallurgical plants with operations located at Nchanga in Chingola, Konkola in Chililabombwe, Nkana in Kitwe and Nampunndwe near Lusaka.

Caring

KCM has spent more than K450 billion in ploughing back part of it profits in various community empowerment initiatives through its corporate social responsibility (CSR) programmes since 2004, the time it bought the mine which was part of the defunct giant mining conglomerate - the Zambia Consolidated Copper Mines (ZCCM).

The London Stock Exchange-listed Vedanta Resources PLC owns KCM which has more than 22,000 employees, and is Zambia's largest employer after the Government.

KCM is also doing its best to show its commitment to caring for the environment.

Mr Janakaraj said the company was exercising transparency in its pollution prevention initiatives by investing heavily in modern and environmentally-friendly technologies.

KCM operates the multi-million kwacha Nchanga Smelter in Chingola, which is the only one of its kind in Africa and one of the three which are found in Poland and Australia, and captures 99.6 per cent sulphur dioxide.

KCM has also embarked on the construction of new concentrators and a refinery at Nkana, which are all environment friendly.

The minig giant has over the years demonstrated that it is committed to caring for the environment by not only ensuring that the Kafue River, which is near its mining installation on the Copperbelt, is protected but also seeing to it that its problem of depleting fish resources is attended to.

KCM has restocked Kafue River with 40, 000 fingerlings to replenish stocks, promote biodiversity and promote eco-friendly system around natural water bodies.

Mr Janakaraj said KCM was concerned that despite the increase in copper production, there was an anticipated fall in prices on the London Metal Exchange which would be caused by market forces and overstocking of copper by the largest buyer, China, which has one million tonnes.

Mr Janakaraj said there was need for the Government to come up with favourable stable taxation policies for the mining sector.

"It takes six years to develop a mine and it takes 20 years for the investor to start receiving returns. Small changes that pluck the mining sector negatively affect the performance of the mining industry," he said.

He said KCM was working in collaboration with the Zambia Development Agency and the Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) on coming up with cheaper value addition products apart from copper wires and coils, which are costly to export because of the weight.

He also said KCM could not falsify figures of its mineral output and exports.

"Falsifying figures of production and exports is a serious offence for a company like KCM which is listed on the London Stock Exchange. It is a jailable offence for the company's top managers," he said.

Chamber of Mines of Zambia general manager Frederick Bantubonse echoed similar sentiments.

"The Chamber of Mines begs for reconsideration of this measure for the benefit

of attracting more capital investment in the sector and increasing the country's production capacity and competitiveness.

"It is worth nothing that this provision of 100 per cent capital allowance is used in many other countries as incentive for attracting foreign direct investment for large-scale projects," Mr Bantubonse said.

Like KCM and other investors in the mining sector, the Chamber of Mines has expressed optimism that the Government and other stakeholders would overcome the challenges posing a threat to the advancement of the country's mining sector.

Mr Bantubonse said the Chamber of Mines was optimistic that Parliament would make a difference to support the mining sector, accelerate growth and achieve its potential by persuading the executive to consider reviewing some of the measures Government wants to implement in 2013.

The chamber proposed that the acceleration of the supply of reliable electrical power and sufficient generation capacity be given due regard, and the implementation of transport infrastructute for efficient rail, road and air transport be given urgent attention.

According to Mr Bantubonse, the measures which need to be put in place include the public expenditure and perception of the mining sector which should be managed through correct information sharing and increased fiscal transparency, and additional support to be given to the local manufacturing industry to enable it supply various key low and high value added goods at competitive prices.

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