Operational challenges, declining ore grades and the need to contain costs have not prevented First Quantum Minerals’ Kansanshi Mine from producing a sterling set of financial results at the end of 2016, and confirming its status as Zambia’s flagship copper mine.
It maintained its position during 2016 as Zambia’s largest copper producer (250 000 tonnes), one of Zambia’s largest mine employers (8 700 people) and Zambia’s largest corporate taxpayer (K1.75 billion in income tax and Mineral Royalty Tax). Kansanshi is also Zambia’s largest gold mine, and produced around 120 000 ounces of gold in 2016, amounting to about 10% of its revenue.
“We are a world-class operation in terms of technology, people and operations,” says Assistant General Manager, Meiring Burger. “We face one of the most complex ore bodies in the world, but we mine it by using world-class technology and expertise. Our people are always pushing the boundaries and trying out new technology, which is what you have to do when you are mining low-grade copper.”
Constant innovation is a key driver of Kansanshi’s continuous improvements in operational efficiency and productivity
The walls at Kansanshi’s head office are plastered with motivational posters encouraging people to think creatively and come up with ideas so that the company can mine efficiently and at the lowest possible cost.
Constant innovation – sometimes in seemingly insignificant areas of operation – is a key driver of Kansanshi’s continuous improvements in operational efficiency and productivity.
One example is Trolley Assist, a system that provides Kansanshi’s 180-tonne haul trucks with electrical power on the steep inclines leading out of the open pits where the ore is mined. It has cut both noise and pollution, and saved more than $6 million a year in net energy costs.
A second example is the current implementation of so-called Jameson cells in the processing plant. It has the potential to dramatically increase the recovery rate of copper concentrate, while boosting its grade. This will further enable increased throughput of concentrate through the smelter, hence higher copper production.
A third example is a novel technology developed in Australia called Blast Balls. These round plastic devices are equipped with a GPS transmitter, and are placed in strategically spaced holes in the blast pattern prior to blasting; after the blast, the balls help to track the movement of the ore and waste that is now broken and moved from its in-situ position. Miners can then identify the position of mineable ore with far greater accuracy and in less time.
But by far the biggest – and most impressive – technological leap at Kansanshi in recent years is its new $900-million smelter, which has dramatically boosted its production capacity. It was tailored to Kansanshi’s own design specifications and built in record time. It was brought to full production in an unprecedented five months. Thanks to its superior technology and processes, it has an annual production capacity of finished copper anode that ranks it among the top smelters in the world.
“Over the years, we have created our own opportunities through investment and innovation,” says Burger. “We need to maintain that investment into the future to extend the life of the mine and to maximise the value of the mineral deposit, but it’s not as simple and straightforward as before.”
Burger notes that many of the major investments that Kansanshi now enjoys the benefits of were made several years ago, when the mining-investment climate was a lot more favourable. Mineral Royalty Tax was low; sufficient power was available and affordable; the regulatory and policy regime was a lot more stable.
“Under those conditions, it was a lot easier to commit to investment and be sure of a reasonable return. Today, however, there are numerous challenges to overcome, and this affects investment risk.”
The power deficit is the most pressing of these challenges, and currently it constrains the viability of any planned mine or smelter expansion, says Burger. With recent tariff increases, Kansanshi’s existing power supply is costing more, and now accounts for a significant portion of overall costs – exceeding the original budget.
The ability to hire expatriate miners – or expats – is another challenge, says Burger, alluding to recent announcements by government concerning expat employment at Zambian mines. The reality is that expats account for less than 6% of Kansanshi’s workforce (a globally very competitive number); and then only in critical roles which can’t be filled using Zambians. Those few expats that are employed at the mine play a central role in training and mentoring local employees in order to increase the Zambian skills base.
“Expats are critical for our success in a competitive, global market,” says Burger. “They bring in vital expertise in implementing new technology and global experience. They allow us to exploit modern technology fully to remain competitive. They mentor and train Zambians, who often attain the same level of skill and experience and then leave the country to become expats elsewhere! They raise the overall skill level of our entire workforce to the benefit of the whole industry. They are an asset to the country.”
Because of this, Burger says, Kansanshi invests a great deal of effort to get expat work permits renewed, in the face of pressure from the immigration authorities to transition expat positions to Zambians too soon – sometimes after only two years, before a proper transfer of skills and experience can be effected. “Two years is not a long time in mining,” he says. “If we employ expats in certain positions, it’s because we have to as a business necessity. After all, it would be far simpler and less costly to employ Zambians, if they possessed the same critical skill-sets.”
Infrastructure is another area of concern. Burger cites the Solwezi-Chingola road, the key export corridor for copper produced in North-Western province, and a lifeline for Zambians travelling to and from the Copperbelt.
“We’re spending $150 000 to $200 000 a month patching potholes and keeping the bypass roads passable – and that’s after the $4 million we’ve just spent on reconstruction in recognition of the central role the road plays in the Zambian extractive sector supply chain and in the local communities as their principal means of communication,” he says. “North-Western province is producing most of Zambia’s copper and paying a significant portion of its taxation, and it would be a positive move to see more of that money reinvested for the benefit of the people living and working here.”
There is a lot riding on continued investment at Kansanshi, for it would help to extend the life of the mine to maximise the resource value and would secure future production from dipping from current levels of 250 000 tonnes in future years.
Kansanshi Mine, along with Barrick Lumwana Mine and FQM’s new Sentinel Mine, has transformed North-Western province from one of Zambia’s poorest areas into a vibrant, economically active region that is today the nation’s leading producer of copper. This economic miracle was brought about by billions of dollars of mining investment which started more than a decade ago; the prosperity of the next decade in North-Western province depends on that mining investment continuing.
See also: Big, clean, green machines