Zambia: Update on Mining Operations - Part IV

THIS POST WAS ORIGINALLY PUBLISHED JULY 03, 2010

Zambia: Update on Mining Operations - Part IV

In this part of our series I try to focus on Chinese involvement with Zambia’s mining. This is a big story itself, in the light of China’s plans in Africa. In its latest issue the TIME magazine mentions: “China is not the only nation that has noticed the opportunities in Africa, but it is the one that has taken them most seriously, in ways that may change not just the region's economic landscape but its political one too.” I highly recommend to read this TIME article – it has a good analysis of Chinese intentions in Africa.

These are some news items that are worth to mention:

• The Post Newspapers Zambia on 02 June reports that that Chinese investments in Zambia have reached about US $2 billion. These all went into mining sector and in Multi – facility Economic Zones (MFEZ). Part of the $2 billion – about $300 million – has gone into the development of the Mulianshi Mine
• The Steel Guru reported that on May 12 the China Development Bank Corporation announced that it will provide $5 billion USD of loans to companies involved in Zambia’s mining sector as part of the agreements signed between the two countries since 2007.
• In May Lusaka Times reported that  China Non-Ferrous Metal Company’s Luanshya Copper Mines is going to recruit 1,000 employees for the beginning of production at the Muliashi open pit mine, taking the total number of workers to more than 3,000. CLM also plans to make an additional investment of more than US$150 million to rehabilitate infrastructure at Luanshya Copper Mine this year. Luanshya is planned initially to produce annually 11,000 tons of ore. The second open pit mine – Muliashi -  is expected to have production capacity of 500,000 tons of copper ore per year.

Within the limits of my Blog, I want to trace China’s activities in Zambian mining industry. These activities are very prominent when you travel from Johannesburg to Lusaka – about half of each flight is filled with Chinese, many of them barely speaking English.

The biggest  Chinese company that operates in Zambia is China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC) that is under the management of the State-owned Assets Supervision and Administration Commission of the State Council. This is a pioneer among Chinese enterprises to implement the “going abroad” strategy and to carry out international investment and cooperation in nonferrous metal mineral resources. Among other projects, we have to mention the following Zambian ones.

Operational:

• Chambishi Copper Mine,
• Chambishi 150,000-ton copper smelter
• Chambishi Leach Plant
• Chambishi Sulfuric Acid Plant
• Luanshya Copper Mines (started copper production on March 26, 2010 with investment of $ 300M USD)

The projects under construction and development include:

• Zambia-China Economic & Trade Cooperation Zone,
• Western ore body of Chambishi Copper Mine

Here is how the TIME magazine illustrates China’s involvement in Zambian mining:

Chambishi Copper Mine was obtained by CNMC through an international bid in 1998, at which time CNMC also obtained the use right to 41 sq. kms of land on the surface of the mine for a term of 99 years. The mine, with resources including 5 million tons of copper and 120,000 tons of cobalt, and involving a total investment of $ 160M USD, is the first and, to date, the largest nonferrous metal mine overseas approved by Chinese government for development and construction. Construction began in July 2000 and the mine opened for production on schedule in July 2003.

Chambishi Copper Smelter whose designed annual capacity is 150,000 tons of blister copper bears total investment exceeding $310 M USD. The smelter started construction in November 2006 and commenced production by the end of 2008. This project will further improve industrial chain of Chambishi Copper Mine, create nearly 1000 jobs and increase the local export volume by $450M USD. In general, CNMC’s investment in Zambia has exceeded US$ 400 million. This is how the smelter looks.

Sino-Metal Leach Zambia Limited and Sino-Acid Products Zambia Limited -- In order to utilize the resources and infrastructure of Chambishi Copper Mine, Sino-Metal and Sino- Acid with total investment of $25M USD was built as an extension of nonferrous metal industrial chain. Sino-Metal and Sino-Acid commenced production on Sept. 8th, 2006, with 300 personnel.

In April it was reported that the Zambian Government has signed a $600M USD agreement with China Non-Ferrous Metals Limited (CNMC) for the extraction of copper from the Mufulira Tailings dams to breathe economic life into the liability that was left over during the privatization of the Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) assets. This agreement covers tailings dams 8 and 10 reprocessed. Sino-Metal Leach Zambia Limited will run the Mufulira Tailings project but this will be dependent on the results of the feasibility studies to be conducted at a cost of $5 million.

 

 Another Chinese company that in January 2010 acquired a substantial part of Albidon Ltd. is the largest nickel producer in Asia – Jinchuan Group.

Albidon is an Australian exploration company with its activities is focused on the Munali Nickel project in Zambia, that has the Enterprise deposit and a number of other nickel prospects in the Munali Intrusion, the most advanced of which is the Voyager prospect along strike to the north of Enterprise. Albidon’s license holdings in southern and eastern Zambia also have potential for substantial uranium deposits. Albidon’s investor presentation from 2008 is located here. It has good pictures of Munali project like this one:

 

 

In April 2010 Jinchuan arranged a $20M USD working capital loan facility for Albidon – which resulted in resuming of Munali mine operations and the increase of operational output.