Zambia mining resumes after power deal
Steady production expected at two mines
ZAMBIA has agreed to provide uninterrupted power supplies to the Sentinel copper mine and an associated smelter at Kansanshi – both owned by Toronto-listed First Quantum Minerals – on condition that the firm agrees to a backdated power tariff increase.
Unrestricted Although other Zambian mining officials say the power tariff increase will be a drain to the company, it will restore power supplies to the operations, according to First Quantum Minerals.
“Unrestricted power is now being provided to the company’s operations. First Quantum agrees to a tariff increase, to approximately $0.09 per kilowatt hour, provided that Kansanshi smelter and Sentinel mine can each import a portion of their total power requirements from alternative suppliers,” said Clive Newall, senior executive at the company.
Zambia is among the African continent’s top copper producers, with exports of the mineral largely accounting for the southern African country’s foreign currency earnings.
Nathan Chishimba, president of the Zambia Chamber of Mines, believes that resolution to the power supply disputes involving Zambian copper miners is key to the country’s mining industry and prospects for growth.
“Resolution of the pricing and provision of power remain paramount to the immediate future of mining in Zambia,” he said.
A bitter dispute had broken out between First Quantum and the Zambian power utility over the power tariff increase.
The Zambian government also had a dispute with Glencore’s copper unit in Zambia, but an agreement has been reached between them to restore electricity supplies to the Mopani Copper Mines.
First Quantum has since completed a four-week scheduled maintenance of the Kansanshi smelter and staged the restart and ramp-up process at the operation. Steady production is expected to start this week.
The tariff increase agreed to will be implemented in two increments, with the first commencing immediately and the second being applied once the details of power import
‘Resolution to disputes is key to the country’s mining industry and prospects for growth’
arrangements are agreed and formalised.
“The tariff is backdated to January 2017, with a portion of the arrears to be applied to improving the stability of power supplies for Kansanshi and Sentinel.
“The tariff will be reviewed upon finalisation of a cost of service study, which has been commissioned by the Energy Regulation Board. The study is expected to be available in early 2018,” said the Toronto-listed copper miner.
Despite power supplies to its Zambian copper operations being reduced in the past few weeks, First Quantum has maintained its budgeted production at the mine, while production from the smelter would be much lower.
The company announced in July that copper output from its Kansanshi mine would increase to 248 000 tons, compared to the previous guidance of 240 000 tons. Output from the Sentinel smelter will be around 185 000 tons.
Copper production for Zambia in 2017 is seen dipping to 753 992 tons from about 774 290 tons produced last year. The decline has been blamed on lower production from Konkola Copper Mines.
It’s expected that Konkola’s share of output will be lower by 40 percent this year, according to Zambian Mining Ministry permanent secretary Paul Chanda. He also said production from Lumwana Copper mine, which is owned by Barrick Gold, would be lower by some 15 percent.