First Quantum Minerals (TSX: FM) has begun commercial production at its Enterprise mine, set to become Africa’s biggest nickel operation, helping Zambia get closer to its goal of turning into a key supplier of battery metals.
The country is aiming to increase copper production by 40% by 2027 to 1 million tonnes, although analysts say that goal is optimistic, considering the country’s power and infrastructure issues.
First Quantum said that building and commissioning Enterprise, which is 12 km from the company’s Sentinel copper mine, took slightly over two years.
Commercial production was declared on June 1, with Enterprise producing 6,147 tonnes of nickel during the three months to the end of June. The figure represents an almost 53% increase from the 4,031 tonnes of nickel produced in the first quarter of the year.
Separately, the Vancouver-based miner said it’s agreed with Jiangxi Copper, its second-largest shareholder at 18.5%, to limit the Chinese firm’s ownership.
Jiangxi isn’t allowed to buy more stock in the company or sell a 5% or larger stake without First Quantum’s consent. The three-year deal also permits Jiangxi to nominate one person to the board.
The agreement could foreshadow a potential deal to sell Jiangxi a minority stake in its Zambian assets, Raymond James mining analyst Farooq Hamed said in a note to clients on Wednesday.
“Given Jiangxi’s longstanding ownership of [First Quantum] without a [shareholders rights agreement], its previous interest in acquiring a stake in the Zambian assets and [First Quantum]’s previously stated intention to sell a stake of the Zambian assets, we highlight that the SRA could potentially be a first step in formalizing a minority stake sale to Jiangxi Copper,” he wrote.
Strong Enterprise
First Quantum narrowed its production guidance for Enterprise this year to 17,000 to 20,000 tonnes of nickel, at the high end of its previous 10,000 to 20,000 tonne estimate, as a result of strong year-to-date production, it said in its earnings report.
“We had another solid quarter in Zambia and with the work achieved to date, both Kansanshi and Sentinel are set up well for the remainder of the year,” chief executive officer Tristan Pascall said in a statement.
“At Enterprise, the continued successful commissioning and ramp up has enabled the declaration of commercial production, while the S3 Expansion [at Kansanshi copper mine] is progressing well and on track for completion in mid-2025,” Pascall noted.
Once at full tilt, the mine in Zambia’s North-Western province will be a top 10 global nickel producer, churning out about 30,000 tonnes of the metal a year in concentrate, and employing more than 900 full-time staff, First Quantum said.
Cobre Panama talks
On its shuttered Cobre Panama mine, Pascal said the company has started meetings with Panama’s government under new President José Raúl Mulino who was sworn in this month.
Mulino has said he would order an environmental study of the Cobre Panama site to see if it could reopen. The company said it would prefer to avoid arbitration on Cobre Panama, but reserved the right to pursue it if talks broke down.
First Quantum also said in its earnings report on Tuesday that it has started a hedging program to protect it from copper price falls.
It’s a huge and vast developmental project in Zambia