World Report

Konkola Copper Mines produces half of Zambia’s copper output

Mopani Copper Mines has almost doubled its production

xpansion plans for leading mines A significant step towards securing the long-term future of the mining industry in Zambia was made in August when the Vedanta Resources group acquired 51 per cent majority shares in the country’s most important mining operation, Konkola Copper Mines.

The deal ended a two-and-a-half year search by the government for a strategic partner for KCM, after Anglo American pulled out of the company in 2002 following a drop to historic lows in international copper prices.
KCM is responsible for around 50 percent of Zambia’s output of copper, thereby accounting for around 35 percent of GDP. It is also one of the country’s biggest direct and indirect employers.

The company has huge potential with assets including the Nchanga mine in Chingola, the biggest single copper producer in the region, and the Konkola mine at Chililabombwe, the largest undeveloped copper resource remaining on the Copperbelt and one of the richest in the world. Copper produced by KCM is exported to the Middle East and Southeast Asia, and more recently to China.

Vedanta Resources, the holding company of the Sterlite Group of India, has pledged to inject £14 million into KCM. The deal leaves 20.6 percent of the company with ZCCM-IH and 28.4 percent with Zambia Copper Investments.
Since Anglo American withdrew, KCM has concentrated on lowering costs and increasing productivity in order to remain viable even if copper prices should fall. “We did a lot of work on all our operations and the results are beginning to show this year from an operational point of view,” says Jordan Soko, KCM’s Managing Director.
“We have demonstrated that we can survive, but a business is not there just to survive, it is there to grow and we have opportunities to grow in many ways.”

Jordan Soko
Managing Director of KCM
‘We did a lot of work on all our operations and results are beginning to show ’

Tim Henderson
CEO of Mopani Copper Mines
‘This year we are well ahead and expect another record year’

Mr Soko continues, “We can exploit our known current resource and we can also start to look for other newer resources within our mining license and beyond. In the next two or three years we will become a more stable company and thereafter we have to start looking for growth opportunities.”

Challenging KCM for first place in the industry is Mopani Copper Mines (MCM), which operates the Mufulira and Nkana mines. The company’s fortunes have been transformed over the last two and a half years since Glencore International became the majority shareholder with a 73.1 percent stake; the other shareholders are First Quantum with 16.9 percent and ZCCM-IH with 10 percent.

Chief Executive Officer Tim Henderson says: “We have managed to turn around the operation and have nearly doubled production, going from 83,000 tons to 160,000 tons. You will not find any other copper mining company in Zambia that has done that.”

According to Mr Henderson, the company is on target to produce up to 170,000 tons of copper this year and expects to add another 30,000 to 40,000 tons in 2005. “In one to two years time we could be the biggest copper producer in Zambia,” he says. “That is our objective. We are already number 1 in terms of profits – at the moment we are the most successful company in Zambia.”

Investment in new technology is reducing operational costs and a further £140 million is to be put into the mine over the next two years. Large capital projects include doubling the capacity of the smelter at Mufulira, making it one of the largest smelters in the world.