FIRST QUANTUM CONSOLIDATION OF ITS KANSANSHI MINING OPERATIONS IN READINESS FOR THE S3 EXPANSION COMMENCES

In June, First Quantum Minerals Ltd. announced that it would be consolidating First Quantum Mining Operations Limited’s (FQMO) Road and Earthworks Division, Mining Division and related supporting services with operations at Kansanshi Mining Plc (KMP).

It has been eighteen years since Kansanshi commenced production, however, ore grades have been deteriorating in recent years as higher ore grades have been depleted over the life of the mine, and annual copper production is now significantly lower than it was ten years ago.

Last year, First Quantum announced that it would be investing more than US$ 1 billion into a major new development at Kansanshi, known as the S3 project, as a result of the important reforms made to the mining fiscal regime. Although ore grades will continue to be lower than those seen historically, the S3 project will massively increase KMP’s mining capacity, pushing production up to former levels and beyond. The S3 project will not only boost production to former heights, but it will also extend Kansanshi’s life by another twenty years into the 2040s and be a catalyst for job creation in the industry.

However, lower ore grades means diminishing returns, and Kansanshi will have to mine ever increasing amounts of rock, to deliver the same amount of copper. First Quantum have therefore implemented a range of practical efficiency measures at the mine, as well as this current consolidation of operations, to ensure there is a sound basis upon which S3 can be implemented with success.

The first steps to implement the consolidation have already been taken, with key stakeholders (including the unions) and employees informed, and all assets – heavy machinery and equipment – transferred over. Now the main staff complement are being re-assigned. Zambian employment law does not however allow for a simple re-deployment of staff under these conditions, so there must be a technical redundancy process at FQMO, followed by the re-employment of these employees at KMP.

There are expected to some job losses as the consolidation is implemented, for example where there is a clear duplication of roles across both entities. However, this will only be applicable to a small percentage of the overall workforce, as the vast majority of FQMO employees impacted by the consolidation are being offered new roles at KMP.

At this point in time, it is not possible to say exactly how many employees may be ultimately affected, as the consolidation is being implemented in phases and there will be constant review, with other employment opportunities across the First Quantum Group likely to be identified during this process.

All employees being issued redundancy notices, including those that will be offered new positions, are being given separation benefits in line with company policy and the provisions of the Employment Code Act.

Commenting on this announcement, Rudi Badenhorst, Chief Operating Officer of FQM said, “Our continued commitment to Kansanshi is demonstrated through our decision to proceed with the S3 project, and other strategic initiatives, totaling well over US$ 1 billion invested over the next 2 years. With S3, Kansanshi has a bright future, although the ‘easy years’ of mining are long behind us. These new projects will test our ingenuity and technological prowess to the full. Consolidating our mining operations at Kansanshi will enable us to better support the roll-out of these projects, and therefore helps ensure their ultimate success.”

 

By: Anthony Dude

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