Zambia's industrial base, the Copperbelt (the Zambian Copperbelt accounts for approximately 46 percent of the production and reserves of the Central African Copperbelt, the largest and highest grade sediment-hosted stratiform copper province known on Earth)-
The Copperbelt is one of the richest sources of copper in the world and the area's production of copper and cobalt are of global importance. The Zambian Copperbelt is unusual among sediment-hosted stratiform copper districts in having abundant cobalt (Co) and low silver (Ag), zinc (Zn) and lead (Pb).
Copper accounts for 80% of Zambia's foreign exchange earnings and has, since 2003, been the main driver of an annual economic growth rate of 5%. Most developing countries depend heavily on exporting just a few products as their means of earning foreign exchange but Zambia is an extreme case - the country depends on the production and export of a single product, copper.
Global copper production has been plagued year after year by supply shortages due to falling ore grades, lower volumes, higher costs and scarce new resources. Copper exploration/development companies looking for or trying to develop deposits already found and copper miners looking to expand their production capacity are all facing some serious challenges:
Falling ore grades Country risk Water supply Labor problems, strikes Shortage of skilled labor Cost of capital for project finance Capital cost overruns Tax and sharing initiatives Energy costs Inadequate exploration funding - the Metals Economics Group estimates that exploration spending plummeted 42% to $7.7 billion in 2009. A lack of new discoveries Currency fluctuations Credit Suisse Group AG said in a recent report that mining companies are missing analysts' output forecasts because of lower-quality ore - Xstrata posted a 3% fall in first half copper output. The miner said copper output fell due to reduced volumes and lower grades at their Mount Isa and Ernest Henry mines.
"Spectacular" was used by UBS to describe western world copper demand growth in the first half of this year. Global copper inventory levels have been on a steady decline. Bloomberg recently reported stockpiles on the London Metal Exchange (LME) have fallen 20% since mid-February. According to the International Copper Study Group world refined copper consumption exceeded production by 67,000 tonnes between January and April this year, against a surplus of 74,000 tonnes in the same period one year ago.
Consider:
The declining rate of production at the world's largest copper mine, Escondida. BHP Billiton forecasts a 5% to 10% production cut at the mine this year due to lower ore grades. Bart Melek, Global Commodity Strategist with BMO Nesbitt Burns in Toronto, said this could take as much as 80,000 to 100,000 tonnes of copper out of the market. U.S. copper mine production had been expected to increase by more than 200,000 tons last year, instead production declined by 120,000 tons. Rio Tinto and Freeport McMoRan both saw their output drop in the first six months of this year. A lack of investment in new mining capability because of recent low prices. The growth in demand from China, India and other emerging markets. Consistent declines in warehouse inventories are underpinning the price of copper. A low interest rate environment bodes well for the whole resource sector.
The overall weakness in the U.S. dollar translates into support for dollar denominated metal prices. The potential for a drop in production from Australia - the world's fifth largest copper producer - as a result of a resource tax the government might implement. China has set a goal of 65% of urbanization rate in 2050. Over the coming 40 years that means 20 percentage points of urban growth per year, that translates into 300 million rural residents becoming urban residents over this time period. Over the next two decades China will build 20,000 to 50,000 new skyscrapers. By 2025, 40 billion square meters of floor space will have been built. 221 Chinese cities will, by 2025, have one million people. More than 170 cities will need mass transit systems by 2025. India's power production needs to rise by 15% to 20% annually which means, according to the International Energy Agency (IEA), India needs to invest $1.25 trillion by 2030 into its energy infrastructure. Because of this investment into new infrastructure India's annual copper demand is expected to more than double to nearly 1.5 million tonnes by 2012 - up from a current 600,000 tonnes. India usually exports between 100 and 150,000 tonnes a year, Indian copper exports are likely to cease and indeed Indians might become large copper buyers "The vision of a lower carbon transportation system, delivered by affordable, hybrid and electric vehicles, connected to smart grids, along with high-speed rail networks, requires copper. A hybrid passenger car contains 50 kg of copper for the electric motor, energy storage and transfer system. Each high-speed train requires 10 tonnes of copper components, plus 10 tonnes in the power and communication cables per kilometer of track. Low carbon electricity sources, such as renewables, and the distributed electricity systems required to incorporate and manage them, need four to ten times the copper content of electricity produced via centralised, fossil fuel generation." - Manifesto for a Competitive European Copper Industry, European Copper Institute
"Our preferred commodities over the short to medium term are thermal coal, copper, zinc and gold. We still like copper and met-coal longer term." - UBS investment research analysts Julien Garran, Tom Price and Edel Tully
Zambia sees bright future for copper mining
"The outlook for copper mining is very bright. Copper will continue to be sought because it is ideal for construction and is a very good conductor of electricity which cannot easily be substituted. We need to invest in exploration activities and that will require a lot of investment." - Mines Minister Maxwell Mwale
Last year Zambian copper output reached 697,860 tonnes of finished copper cathodes from 17 privately-owned mines. With copper production rising by 16% in the first half of 2010 - first-half output equals 393,089 tonnes - the country is on course to hit its forecast 2010 target of 750,000 tonnes (a level last seen in 1973). Zambia continues to attract new mining investments (Zambia's Chamber of Mines of Zambia said investments in the mining sector have peaked at $5 billion in the last eight years) and the country should achieve the targeted 1 million tonnes output forecast for 2012.
"The extractive industries are the key drivers of African economies in general. Here in Zambia, mining has become the mainstay of Zambia's economy and therefore it is in the interest of government to see that investment in the mining sector is increased. This will reverse the negative effects of the global economic crisis on the nation." - Mines Minister Maxwell Mwale,
Zambia's government said that it expects a strong performance by the mines over the long-term due to rising metals prices and has urged mineworkers' unions to support new investors.
Zambia's mineral royalty is 3%, which compares very favorably to other jurisdictions of around 5%. Corporate tax is charged at 25% with a proposed profit variable tax at 15 % - if after paying their 25% corporate tax companies still have a profit greater than 8% of their overall income than these profits will be taxed at 15% - this tax is designed to transfer a fair share of the windfall value of copper to the Zambian government.
Do not confuse Zambia with the Democratic Republic of the Congo. Although both countries have immeasurable resource riches there is a vast difference between them, namely political risk.
Caledonia Nama Cobalt and Copper Projects - Caledonia Nama Limited, a wholly owned subsidiary of Caledonia, holds four contiguous Large Scale Mining Licences, which cover approximately 800 square kilometres on the northern extension of the Zambian Copperbelt.
The northern boundary of Caledonia's licence areas is the Congolese border and the eastern boundary is with licences areas that are held by a joint venture between Vale and African Rainbow Minerals where a new copper mine (the Konnoco mine) is currently under construction.
Prior to the 2011 programme, exploration activities had defined three main styles of mineralization in the Nama Licence area:
NAMA neighbor; African Rainbow, Vale start building $380m Zambia copper mine JOHANNESBURG (miningweekly.com) –
Konnoco Zambia, the joint-venture (JV) company owned by South Africa-based African Rainbow Minerals (Arm) and Brazilian miner Vale, has started construction on the $380- million Konkola North copper mine project.
The JV partners on Friday announced that they viewed the project as an early development for a copper growth strategy in Africa.
The mine, which will have a design throughput of 2,5-million tons a year of ore to yield 45 000 t/y of contained copper in concentrate, was Arm’s first venture on the African continent outside South Africa.
“The new copper mine that we are building in Zambia with our partner Vale is significant because it adds a new exciting commodity to our diverse commodity portfolio and is also our first investment in Africa,” said Arm chairperson Patrice Motsepe.
Arm would house the project under a new division, Arm Copper.
The concentrator plant at Konkola North would be commissioned within the next 27 months, with the project expected to reach full production by 2015.
The mine has an expected life of 28 years, but the JV partners have started a further three-year exploration programme on an additional exploration area that could potentially double output at the mine to 100 000 t/y of copper in concentrate.
Last year, Arm CEO Andre Wilkens indicated that the group would aim to produce at least 100 000 t/y of copper in five years.
Arm already mines coal, manganese, iron-ore, platinum, nickel and chrome and sees copper as a “very good commodity” to be in.
Vale Inco now just 'Vale' TORONTO (miningweekly.com) –
NAMA neighbor; Nickel-miner Vale Inco will trim its name down to just Vale, the Brazilian-owned group said on Thursday.
Rio de Janeiro-based Vale, the world's second-largest mining company, bought Canadian nickel-miner Inco in late 2006.
The global nickel business will continue to be headquartered in Toronto, Vale nickel CEO Tito Martins said.
“Our nickel business today is larger than it was in 2006, when we first invested in Inco and we are building on that investment every day,” he added.
Vale's nickel unit has more than 11 000 employees worldwide and net sales in 2009 of $3,26-billion, accounting for 13,6% of Vale's overall global revenue.
Nama Base Metals Project, Zambia
The 2012 drilling programme continued with the objectives of further identifying and defining extensions of the mineralised zone identified in 2011 and increasing the confidence level of the information on this mineralised zone.
As at October 25, 2012, 30 holes and 8,400 metres of drilling had been completed and three rigs are currently working on the site.
To date, an area of copper mineralization has been defined as follows:
current identified strike length of 1.3 km and a dip extent of 900 metres;
mineralisation intersected at depths from 98 to 579 metres;
thickness of mineralized zone varies from 10 to 27 metres;
average copper grade of 0.52%; and
possible extensions of the mineralized zone to the west and to depths below 580 metres will be drill tested in future.
The 2012 drilling programme is expected to be completed shortly following which the drill results will be analysed and interpreted.
Caledonia expects to issue an NI 43-101 compliant copper resource and reserve statement by June 30, 2013.
Caledonia will continue to manage its cash resources so that it retains the financial capacity to progress this project as fast and as far as possible without requiring third party involvement or equity funding.
• RE: the information on this mineralised zone - As at October 25, 2012, 30 holes and 8,400 metres of drilling had been completed. This is more than previously planned and reflects the commencement of the complete in-fill drilling program.
The 2012 drilling programme will be completed shortly following which the drill results will be analysed and interpreted.
Caledonia expects to issue an NI 43-101 compliant copper resource and reserve statement by June 30, 2013.
• the commencement of cobalt production by June 30, 2013; the submission of an updated copper sulphide mineral resource and reserve statement and as sociated feasibility study and program of operations by June 30, 2013; and the commencement of copper sulphide resource exploitation by March 31, 2015.
• Caledonia’s Board has approved a proposal which it believes will address the requirement of the Zambian government that cobalt production commences by June 30, 2012. This proposal will be discussed with the Zambian authorities and, once ratified, will be communicated to investors.
• Caledonia has sufficient cash resources to cover all of the exploration costs budgeted for 2012 and 2013.
Caledonia will continue to manage its cash resources so that it retains the financial capacity to progress this project as fast and as far as possible without requiring third party involvement or equity funding.
CALVF Nama Copper/Cobalt Exploration Project, Zambia: Summary of Results of the 2011 Exploration Programme and Outline of the 2012 Exploration Programme -
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