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First Quantum approves $1.35bn capex for Kansanshi expansion, Enterprise projects

Tuesday, May 10th, 2022

opencast mining at one of First Quantum's operations

First Quantum Minerals’ board of directors has given the go-ahead for the immediate roll-out of two projects in Zambia – the S3 expansion at its Kansanshi copper/gold mine, as well as the roll-out of the Enterprise nickel project.

“First Quantum has been working constructively with the government of Zambia’s New Dawn administration as part of their efforts to reform the mining sector, attract investment and increase Zambia’s copper production.

“The approval of the projects reflects First Quantum’s increased confidence in the investment climate in Zambia,” First Quantum CEO Tristan Pascall said on May 8.

He added that the efforts of the New Dawn administration would help to establish a platform for more stable, durable and responsible mining in Zambia.

First Quantum believes the commitments made by the Zambian government address the ease of doing business in the country by covering issues such as expediting immigration procedures in exchange for commitments for local employment levels, competitive pricing of power transmission and power procurement from independent sources – which, in turn, would support renewable energy projects – as well as measures to ensure the ease of importing and exporting goods.

The approvals for the two projects follow the reintroduction of the deductibility of mineral royalties for corporate income tax assessment purposes that became effective January 2022 in Zambia.

This measure realigned Zambia with international best practice, First Quantum said.

“The government’s commitment to improve the predictability of the mining fiscal regime also provides the certainty needed to support large capital investments in Zambia,” the company said in a statement, adding that all points of contention had been successfully resolved between the First Quantum and the Zambian government, thereby removing any “stumbling blocks” in the progress towards the S3 expansion and the Enterprise nickel project.

This included reaching an agreement regarding the outstanding value-added tax receivable sum and an approach for repayment based on offsets against future mining taxes and royalties.

KANSANSHI

The Kansanshi mine produces more copper than any other copper mine in Africa. Since Kansanshi began producing in 2005, First Quantum has rolled out several expansions, with the operation now capable of producing 340 000 t/y of copper and more than 120 000 oz/y of gold.

The S3 expansion is expected to transition the current selective high-grade, medium-scale operation to a medium-grade, larger-scale mining operation that will be more appropriate for the higher proportion of primary, lower-grade sulphide ores at depth.

When completed, the S3 expansion will comprise a standalone 25-million-tonne-a-year processing plant with a new and larger mining fleet, which will increase Kansanshi’s total yearly throughput to 53-million tonnes.

Once the expansion is completed, copper production from Kansanshi is expected to average about 250 000 t/y for the remaining life-of-mine to 2044.

A significant portion of the initial construction works for the S3 expansion were started previously, with much of the civil and structural work on site completed.

The remaining work includes the completion of the remaining detailed engineering design works, as well as the procurement and installation of equipment, electrics, controls and infrastructure.

Detailed engineering work will allow First Quantum to determine purchase orders for key long-lead items.

The S3 processing train will include a 28 MW semi-autogenous grinding mill and a 22 MW ball mill. The openpit mine will be expanded to increase the supply of sulphide ore from the main pit and extend into the south-east dome deposit.

The expanded mining fleet will use high-end equipment and will include new electric loading and drilling equipment, along with the extension of the current electric trolley assist infrastructure.

In parallel with the expansion of the mine and processing facilities, First Quantum said it planned to increase the throughput capacity of the Kansanshi smelter from 1.38-million tonnes a year to 1.65-million tonnes a year of concentrate. This would enable the smelter to produce more than 400 000 t/y of copper anode.

The total capital expenditure (capex) associated with the S3 expansion is expected to be $1.25-billion, which includes $900-million on the S3 plant and mine fleet and $350-million for prestripping of the south-east dome pit.

First production from the S3 expansion is expected in 2025.

“The Kansanshi mine has been a cornerstone asset for First Quantum for 15 years and the S3 expansion will expand production and extend the mine life for another two decades,” Pascall said.

ENTERPRISE

Meanwhile, the Enterprise nickel sulphide project is aimed at exploiting the proven and probable reserves of 34.7-million tonnes of ore at 0.99% nickel.

The development timeline for Enterprise is expected to be about 12 months.

The project will consist of a single, main open-pit and one extension to the southwest. It will use the existing four-million-tonne-a-year circuit that was previously built as part of the original Sentinel processing complex.

The main workstream to bring the project online will be the prestripping of waste.

Total capex for the project is expected to be about $100-million. About $60-million has been allocated for prestripping with an additional $40-million budgeted for infrastructure and plant commissioning.

Once at full production, Enterprise is expected to produce an average of 30 000 t/y of nickel in high-grade concentrate. First production of 5 000 t to 10 000 t of nickel is expected in 2023.

“The low-cost, high-grade Enterprise nickel project is well placed to supply the rapidly growing electric vehicle battery sector,” Pascall said.

A mining contractor will be mobilised to start prestripping of the Enterprise project pit in June.

“The S3 expansion and the Enterprise nickel project are a key part of our brownfield growth strategy. The approval of these two projects is an important milestone for the company’s path towards responsible production growth of the metals needed for the global green energy transition,” Pascall said.

Power for both projects will be supplied predominantly from renewable sources, including existing hydropower within Zambia, as well as potential wind and solar power projects that are under consideration by third parties.

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