First Quantum contemplates smelter

With concerns mounting about Zambia’s maxed-out smelting capacity, First Quantum Minerals (FM-T, FQM-L) is evaluating whether the time has come to build and operate a copper smelter. A decision will be made later this year.

Concentrate from its Kansanshi copper mine is currently treated at smelters in the country, but from time to time, due to limited smelting capacity, the miner has sold its copper concentrate to third parties for export.

Building and operating a smelter may make the most sense, First Quantum says, noting “the substantial increase in production expected from the Kansanshi mine, together with anticipated new production in Zambia, including from the Sentinel deposit.” 

In May, the company announced it started a two-phase expansion project at Kansanshi to expand annual copper production capacity from the current 250,000 tonnes to 400,000 tonnes by 2015.

The first phase is expected to boost production capacity to 285,000 tonnes, and expand the annual treatment capacity of the oxide circuit by about 20% to 8.5 million tonnes, while “building in flexibility to allow for the mixed and sulphide circuits to be switched as needed to suit mining activity.” The expansion will include the use of relocated equipment from the recently closed Bwana Mkubwa copper SX/EW plant, as well as new installations. This work is expected to be completed during the fourth quarter of 2011.

The second phase is slated to start in the second half of 2012, with commissioning targeted for the first half of 2014. This phase involves building a new concentrator with a planned throughput of 25 million tonnes a year.

The Kansanshi mine, the world’s eighth-largest copper mine according to the company’s figures, is 80% owned by Kansanshi Mining, a subsidiary of First Quantum. The mine is 10 km north of the town of Solwezi and 180 km northwest of the Copperbelt town of Chingola. As of Dec. 31, 2010, the mine had an estimated remaining life of 12 years based on identified mineral reserves, a copper price of US$2 per lb. and a gold price of US$800 per oz.

Meanwhile in April, First Quantum received large-scale mining licences from the Zambian government to develop its Trident project, which give the company the right to carry out mining operations for a 25-year period. 

“Based on an internally generated resource estimate, the company is proceeding with the design of a project that will initially produce 150,000 tonnes of copper in concentrate annually, then rising up to 300,000 tonnes of copper in concentrate,” the company said in a news release. “Once the resource drilling is complete, the production target may be increased further.”

At presstime First Quantum traded at $133.79 per share, within a 52-week range of $52.76 (July 5, 2010) and $148 (April 6, 2000).