Producing in Katanga: the relative calm before the storm.
Gecamines, DRC's state-owned mining company, under technocrat management since 2010, is trying to move away from just holding minority shares in Katanga's mining operations. At its height in the 1980s, Gecamines produced 500,000 mt/y of copper, but in 2012, the company only reported 35,000 mt. Big plans are in store however, with a target of 100,000 mt/y in 2015.
"2012 was the first year of Gecamines' 2012-2016 Strategic Development Plan. As part of the plan, Gecamines recommenced its exploration programs, which had been on hold for more than 20 years and to date, we have drilled 12,334 meters, increasing our total copper reserves to 4,851,000 mt. We've also begun to augment the capacity of our production units: the Kambove and Kolwezi's concetrators' capacities were increased by 600 and 1,000 mt/d during 2012. Additionally, we are constructing an HMS plant, which will be finalized in 2013. Gecamines is also putting increased emphasis on its auxiliary units and we have acquired new machinery in Katonto and Luena. On the power front, we have commenced a feasibility study for a 500 MW thermal power-plant in Luena that would solve our current energy deficit," said Kalej Nkand, CEO of Gecamines.
In 2013, Gecamines made its first ever move to acquire an asset outside of the DRC, partnering with Freeport and Lundin to acquire OM Group's refinery and sales business in Finland for $435 million. Additionally, Gecamines is gradually acquiring proprieties at home. "Our joint-venture policies have also changed as part of our Strategic Development Plan: CMSK Sprl is now 100% owned by Gecamines, and we have also fully recovered the large deposits at Deziwa from Somidec Sprl. Other notable decisions include asserting full ownership of the Mutoshi and Kasunta Lupoto projects, as well as the commencement, in July 2012, of an audit program for eight of our joint-ventures," said Nkand. Gecamines is also undergoing a thorough financial reform and in 2012, the company reduced its debt from $1.5 billion to $962 million. This move has also led to a restructuring of its workforce: "In 2012, we reduced the number of our employees by 730, and, looking forward, we have $130 million allocated for the next two years to efficiently reorganize ourselves on this front and to emerge leaner and better prepared," said Nkand.
Obtaining financing for its large-scale projects could prove to be problematic for Gecamines in the current economic climate, but so far the company is on track with its ambitious plans: "Gecamines' main objectives for 2013 are to produce 50,000 mt of copper as well as to successfully re-launch itself as a world-class independent mining operator. We are optimistic and confident that we will be able to accomplish our Strategic Development Plan's goals and produce more than 100,000 mt/y of copper starting in 2015," concluded Nkand.
Tenke Fungurume Mining (TFM), the DRC's largest single copper mine, is located 175 km northwest of Lubumbashi. Its ownership is divided between Freeport-McMoRan (which operates the mine and holds a 56% stake), Lundin Mining (24% equity stake), and Gecamines (20% stake). TFM's story dates back to 2006, but actual production at the site only started in March 2009. Exclusively a copper cathode and cobalt hydroxide operation, TFM produced 157,671 mt of cathode and 11,669 mt of hydroxide at a cash cost of $1.23/lb in 2012. The year 2013 will break record production values at the site, as H1 2013 saw TFM deliver 109,588 mt of cathode and 4,845 mt of hydroxide already, at an average copper grade of 4.5% per mt. These performances come as the result of the Phase II expansion of TFM, which now enables the operation to produce at a nameplate capacity of 195,000 mt/y of copper cathode and 15,000 mt/y of cobalt hydroxide. Meanwhile, on the power front, "TFM has invested more than $200 million in the refurbishment of four turbines at the Nseke hydro power station, which has the potential to produce 260 MW of electric energy," said Mike Ciricillo, president of Freeport-McMoRan Africa.
Despite legal woes, Eurasian Natural Resources Co. (ENRC) is continuing mining operations (at the Boss Mining, Camrose, and Frontier mines) at full speed: in 2012, it accounted for 35,000 mt of sealable copper content at a 3.14% average grade and 9,500 mt of sealable cobalt at an impressive average grade of 1.43%. 2013 has seen a tremendous increase of ENRC's production, due to its newly inaugurated 40,000 mt/y copper concentrate Frontier mine. In H1 2013, ENRC produced 37,000 mt of copper content at an average grade of 1.51% already, while also putting out 4,800 mt of cobalt content at an average grade of 1.47%. ENRC's smelting facilities are, however, located in Zambia, at the Chambishi facility, which was acquired by the company in 2010 for $300 million.
GlencoreXstrata, the world's fourth largest diversified mining company, is also present in the DRC. In May 2012, the Anglo-Swiss company increased its share in Mutanda Mining (MUMI) to 60% with a $480 million deal. However, the idea was to merge the 2,300 people strong MUMI operation with its neighboring Kansuki project, a move made official in July 2013, between Dan Gertler's Fleurette Group and GlencoreXstrata, now operating the integrated project with a 54.5% stake. Mutanda produced 87,000 mt of copper cathode and 8,500 mt of cobalt hydroxide in 2012. Expansions plans are in full swing and the new Mutanda/Kansuki project is expected to have an annual capacity of 200,000 mt/y of copper cathodes and 23,000 mt/y of cobalt hydroxide by the end of 2013. GlecoreXstrata also owns 75% of the Katanga Mining Co. and the company's KOV open pit mine and KTO underground mine produced 92,963 mt of copper metal and concentrate in 2012, at a grade of 4.12%. Power disruptions caused 1,609 hours of inactivity which led to the company increasing its output by only 2% in comparison to 2011. In March 2012, GlencoreXstrata signed a $283 million loan for a power project with SNEL which will see 450 MW being delivered to Katanga, Mutanda and Kinsuki by the end of 2015. The operations, which currently consume around 150 MW, should increase consumption to 400 MW, given future expansion plans (200,000 mt/y capacity for Mutanda/Kinsuki's and 310,000 mt/y for Katanga Mining). Results can be seen already, with Katanga Mining boasting 60,274 mt of copper metal and concentrate produced at a grade of 4.48% in H1 2013, a volume 40% higher than that of H1 2012.
Minmetals Resources, a subsidiary of China Minmetals Corp. (CMC), acquired Anvil Mining in February 2012 for $1.3 billion. Today, Minmetals Resources' subsidiary, MMG, is effectively running operations at the Kinsevere site, which produced 36,048 mt of copper cathode in 2012. After solving power supply issues, MMG is currently running the site at its full nameplate capacity of 60,000 mt/y. Miles Naude, general manager of MMG DRC, talks about the importance of the project to the global mid-tier producer and the plans ahead. "DRC is central to MMG's African expansion strategy, and Kinsevere is the company's spearhead in the continent," Naude said. "The operation employs a total of 1,680 employees and contractors, 97% of which are DRC nationals. This is above the Department of Labor's local employment ratio requirement of 93.5%. The goal is to get our business into sustainable consistency and achieve our 5,000 mt/month nameplate capacity regularly, despite the limitations of grid power supply. MMG sold the 70% stake that it had in the Mutoshi project back to Gecamines, while receiving in return the exploration and mining rights for eight tenements in and around the Kinsevere operating asset. MMG strongly believes that the DRC and the Copperbelt represent tremendous opportunities and we want to expand our footprint here (in the DRC or Zambia)."
In 2011, Jinchuan Mining of China acquired Metorex for $1.36 billion, gaining the ownership of Ruashi Mining, a site on the outskirts of Lubumbashi. Cameron Clarke, general manager of Ruashi Mining, spoke about the project: "Our feed grade is about 3.25% and we produce 3,100 mt/ month of copper cathodes; we also make between 260 and 320 mt/month of cobalt hydroxide, which accounts for between 15% and 25% of our overall revenue, depending on the feed. We are now back at the pre-power crisis production levels of 2011 because in 2012, we were producing 37% less than now as a result of power unreliability. Ruashi Mining's operating costs at the moment are just under $4,000 / mt."
Meanwhile, Tiger Resources of Australia is rapidly expanding its works at the SXEW plant for its flagship Kipoi project, in which the company owns a 60% stake (the other 40% belongs to Gecamines). Charles Brown, CO0 of Tiger Resources, spoke about Kipoi, which produced 35,000 mt of concentrate in 2012, but also about the company's other expansion plans: "We achieved record production in Q2 2013 at Kipoi and as we are digging deeper, the grades become higher. The concentrate is being sold abroad, mainly to Chambishi (Zambia) and China. The SXEW plant's construction is going ahead full-speed, and we will be producing copper cathode there starting Q2 of 2014. We acquired a 20% stake in Chrysalis Resources' in January 2013, giving us access to their Zambian copper projects and providing diversification from having assets in just one country. We also acquired another reconnaissance license in DRC, called La Patience, for which we will start drilling in the 2013 dry season. Our plans are to expand to a 50,000 mt/y operation in 2016."
Mawson West further consolidates the strong Australian presence in Katanga, through its two projects, Dikulushi (a former Anvil Mining asset) and Kapulo (a greenfield project located in the north of the company's tenements). Initially listed on the ASX, Mawson West decided to move on the TSX, where it managed to raise funds of over $120 million in 2011. "The Dikulushi ore-body is magnificent--typically 6% to 7% copper, and 200 g/mt silver. The strategy was to utilize the revenue from Dikulushi to assist with the remaining funding for Kapulo. Currently, open pit mining at Dikulushi has been completed, and we are now processing its stockpile which has generated good revenue. Dikulushi's next phase will be its extension work, circulating to the market that Mawson West is about to finalize an underground mining strategy utilizing existing infrastructure. For the next one to five years our strategy will be to extend Dikulushi via its underground facility and introduce satellite ore-bodies. The construction of Kapulo is over 50% complete with its construction risk diminishing; $70 million has currently been invested, with $50 million still available to spend. We generate our own power at both of our projects, 4 MW at Dikulushi and 6 MW at Kapulo. During 2013, the company has invested $10 million on exploration drilling, 65% to 70% of which has been expended at Kapulo, which will be commissioned in the second quarter of 2014," said Bruce McFadzean, managing director and CEO of Mawson West.
Indian players are also well represented in the DRC, with such companies as Somika and Rubamin, which were however among those affected by power supply issues in 2012. Last, but not least, one of the most promising companies in sight is Ivanhoe Mines, which holds ownership rights for the Kipushi (68% Ivanhoe, 32% Gecamines) and Kamoa (95% Ivanhoe owned through its subsidiary, African Minerals) projects. Kamoa is a newly discovered asset in the proximity of Kolwezi, and according to a January 2013 resource estimate, the project is the world's largest undeveloped high-grade copper discovery, with indicated resources of 739 million mt at an average copper grade of 2.67%, containing a total of 43.5 billion lb of copper. Kamoa's preliminary economic assessment estimates an initial annual production of 143,000 mt of copper, at a cash cost of $0.95/lb, which could sustain the mine's life for 61 years.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||Global Mining Reports: MINING IN DRC|
|Publication:||E&MJ - Engineering & Mining Journal|
|Article Type:||Company overview|
|Date:||Feb 1, 2014|
|Previous Article:||Katanga, DRC's green pearl: an overview.|
|Next Article:||"Katanga still going strong": interview with Moise Katumbi Chapwe, governor, Katanga province.|