First Quantum could build Africa copper smelter
Wed Jun 10, 2009 4:54pm EDT
reuters.com
(In U.S. dollars, unless noted)
By Cameron French
TORONTO, June 10 (Reuters) - First Quantum Minerals (FM.TO) may consider building a copper smelter in Africa to help ease a capacity shortage that has raised costs at its mines, the company's president said on Wednesday, lifting its shares.
The company said in February it expected to produce copper at an average cost of 80 cents a pound from its three mines in Zambia, the Democratic Republic of Congo and Mauritania.
However, tight capacity at smelters in Zambia -- including First Quantum's partly owned Mufulira smelter -- has forced the company to send about a third of its mined copper overseas for processing, which adds about 22 cents a pound for each pound exported, the company's president, Clive Newall, said at an investment conference in Toronto.
"Our smelting needs will increase over time, so we're looking at a number of options in that respect," Newall said.
"We don't particularly want to be in the smelting business. But on the other hand, we don't like not being in control of our destiny either."
He said capacity at Mufulira, which is majority owned by Swiss commodities trader Glencore International, had been expected to free up as two Glencore mines were to be idled.
However, rebounding copper prices and pressure from the Zambian government spurred Glencore to keep the mines open, Newall said, which has left First Quantum searching for other takers.
Newall noted the company's smelter needs will only increase as it opens its Kolwezi tailings project in DRC, likely late in 2010.
Shares of Vancouver, British Columbia-based First Quantum were up 7.7 percent at C$55.93 on the Toronto Stock Exchange on Wednesday.
Newall also said the company has been exploring beneath its defunct Lonshi mine in DRC and had uncovered new deposits below the original orebody that have been grading a rich 5-7 percent copper.
Exploratory drilling at the site has been difficult due to the high clay content in the ground, he said, so the company has extended a decline down into the orebody from which it will explore deeper into the deposit.
Assuming the ground conditions allow for mining, Newall said the plan would be to build a small concentrator that could produce about 35,000 tonnes of copper a year, while it continues to explore to see how big the orebody could be.
The company expects to produce 380,000 tonnes of copper and 240,000 ounces of gold this year.
($1=$1.11 Canadian) (Reporting by Cameron French; Editing by Frank McGurty) |
