Speculation is mounting over the future of the much anticipated construction and commissioning of more than US$500 million Mokambo underground copper mine in Mufulira, a unit of China’s Changfa Resources Limited whose development was focused to start in August this year with an initial investment o US$500 million.
The project which was delayed because of climate weather conditions including delayed rains to kick start, leading to the owners delaying the project for another two to three months, construction is unlikely to start before the end of the year because of developments in the management of the would be mine.
According to sources close to the project, the mine, which initially was a subsidiary of Changfa Mining Resources of China has been taken over by the parent company. This was the reason a Chinese delegation came to Zambia recently to explore investments opportunities including reviewing the future of the would be Mokambo copper underground mine.
“Changfa Limited are the new owners now…..they have bought out the company and the whole process of constructing that commissioning the mine would have to be redone through the Zambia Environmental Management Agency who will seek a new Environmental Impact Assessment,” sources close to Zema said recently.
Mufulira District Commissioner Chanda Kabwe confirmed there has been developments at the would be mine and that his office is awaiting to hear what the plans for the new owners will be.
“Yes, the mine has been taken over by new owners,” he said. “We are waiting to hear what the new owners (Changfa Resources Limited) will come and tell us,” he said.
ZEMA spokeswoman Irene Chipili stated that according to reports, the mine has changed hands and the agency awaits to get a formal notice to pave way for a new EIA report to allow new owners to proceed with the project.
“We are told there are new owners but we don’t have a formal notice, if that is the case, the new owners will have to do a fresh EIA report,” she said.
Earlier, geological studies undertaken in Mufulira, the company established vast deposits of copper in the area which it said if exploited, could help Zambia realise its mineral potential.
Company general manager Jun Lu said the company’s investment in the mine sites is expected to rekindle the future of copper mining in Zambia. The company had earlier employed 180 people during exploration activities at the site and invested $600,000 in its recently undertaken geological surveys, explorations and feasibility studies over the past three years.
An additional US$2,000 had been utilized in putting up modern offices near the new mine site in anticipation that construction of the mine will begin by August 2014 when surveys and explorations are finalized.
Recently Kabwe had antoicipated the Mokambo underground project would contribute massively to the national treasury and the country’s development when fully operational. An estimated 600 jobs are expected to be created in mining and construction of the mining project.
“The new mine will also offer an alternative source of employment as well as other incentives such as human welfare development under corporate social responsibility,” Chanda said recently.
Changfa’s proposed project will be the second mine to be established in Mufulira after the more than 80-year-old Mufulira mine, a unit of Glencore AG International Resources which operates under Mopani Copper Mines Limited.
Recently, Jun said there are a number of copper deposits in the area worth exploiting to assist Zambia, Africa’s large copper producer, realise its mineral potential and that an initial investment of invested K300 million (US$600,000) in geological surveys, explorations and feasibility studies during the past three years.
“We will be mainly involved in underground mining and that is why our geological explorations have gone beyond 600 meters and we have promising results of the copper ore deposits,”
Copperbelt Deputy Minister Mwenya Musenge said during the launch of the mine project recently that the company had pledged to invest about US$500 million in its operations when fully operational.
The mine is expected to create 3,000 jobs after three years and is projected to produce about 50,000 tons of copper per annum, according to Company deputy general manager Xiangyu Ervin Long.
Xiangyu said exploration works on the new mine had commenced three months ago after government gave it an operating license and that US$17 million has already been spent on the project.
The mining company pledged its commitment to observing Zambian labour laws, including the new minimum wage. Musenge is happy with the new project and that he wants to see good working relations between government and the new investor when the mine is fully operational.
“The interests of workers and investor should be respected. Mufulira residents have a duty to embrace the new investor,” he said.
“Changfa Group of Companies has 60 subsidiaries around the world and has a farm machinery company located in Lusaka’s show grounds. Changfa group of Companies recorded an annual return of over US$2 billion”, the company said.
It was earlier projected that the underground mine would be fully operational in two years time while the exploration works will end in October this year.
The mine will be situated about 16 kilometers north of the Zambian mining town of Mufulira, near the border with the Democratic Republic of the Congo (DRC) where Mokambo is located. Earlier investors expressed little or no interest in the area during the rush for the country’s mining industry’s privatization, according to reports by Mineweb online.
Recent visits to the area by among other renowned mining companies, TSX Venture Exchange listed ICS Copper Systems Limited (Ticker ICX), which recently acquired a license over the property and another license in the DRC things started looking up.
According to data by Mineweb, earlier the Mokambo project was a joint venture with North Western Plant Hire Limited, a Zambian company holding a 30 percent interest with ICS having the option to increase its stake to 80 percent, according to Mineweb citing ICS president and chief executive officer Graham Chisholm.
All things being equal, plant construction at Mokambo could have start by May 2008 with first production anticipated by the end of 2008, Chisholm added in his interview with Mineweb.
The Mokambo area, at the northern end of the Mufulira Syncline, a famous geological structure where Glencore International AG and First Quantum Minerals (FQM)’s Mopani Copper Mines (MCM) Plc operates the Mufulira Mine.
Mokambo was drilled in the 1970s and boasts a historical resource that suggests 22 million tons of sulphide ore with grades of 1.45 percent to 1.72 percent of copper.
“But this is not Canadian National Instrument 43-101 compliant and accordingly the property will be drilled to bring it up to that standard. We know there is also an oxide cap on this property and the current drill program, expected to last up to six months, will define exactly what that oxide cap consists of. “Chisholm told Mineweb then.
We are hoping it will be in the region of seven million tons of Oxide Ore with copper grading the same or higher than the sulphide deposit. There is also the possibility of cobalt credits which will come out of the drill program,”
The idea is to process one million tons of ore per annum over seven years and produce approximately 11,000 tons of finished copper per year. The proposed mine life of the oxide cap was estimated at seven years at which time we will then begin on the sulphide deposit.”
Asked whether the plant development and production targets were not a little too ambitious, Chisholm said the company has enough financial backing from a mix of institutional and retail investors. He added that 70% of the investors are British and Swiss institutional and high net worth individuals, and that the finer details of project financing will be addressed by early next year, when the financing is anticipated to be organised.
“Our plan [this] year is to drill the property, secure an Environmental Impact Assessment report from the Environmental Council of Zambia, receive leaching and ore permeability reports from Mintek and complete a Project Feasibility Study from GRD Minproc. Project financing will take place in early 2008, plant construction will begin around May 2008 and first production approximately end of 2008,” he said.
Chisholm anticipates the Mokambo mine not to be a high cost producer because the company will use the EMEW electrowinning system, which it is already piloting at a copper/cobalt project near the Shituru metallurgical facility in the DRC. This system, Chisholm said, produced 99.99% grade copper and 80% cobalt powder prior to purification. ICS has ordered 270 EMEW copper plating cells for the Mokambo project and these are expected on site in October this year.