Copper mining can produce lucrative by-products. The most common one in Zambia is cobalt, which sells for five times more than copper on world markets.
But the ultimate by-product for any copper mine is gold, and FQM’s Kansanshi mine in Solwezi has a lot of it. Thanks to advanced mining techniques that Kansanshi has built into its mining processes, it has been able to recover more and more gold. The metal is obtained towards the end, in the refining process.
Although gold accounts for barely 10% of Kansanshi’s overall revenue, the quantities are sufficiently large to make Kansanshi Zambia’s largest gold mine. In 2015, Kansanshi produced 136 000 ounces of gold, a quantity which has been rising steadily over the years, along with the rise in copper production. Since 2005, the mine has produced more than 1 million ounces of gold.
Thanks to advanced mining techniques that Kansanshi has built into its mining processes, it has been able to recover more and more gold
However welcome the additional gold revenue, Kansanshi is first and foremost a copper mine, and a very modern one too. Unlike the older Copperbelt mines, Kansanshi is a relatively new mine which was able to start with a clean slate, and build a largely new operation unencumbered by any major legacy issues or pre-existing constraints.
And in an unusual departure from the typical long lead-time to production and profitability, Kansanshi completed the mine ahead of schedule and started operations ahead of schedule. Within three years, it had generated its first profits, and started to pay tax revenue to the government. The mine has always been Zambia’s biggest taxpayer. On an annual basis, it typically accounts for about one-third of the industry’s tax revenues.
When all the various taxes are combined (royalties, profit-based tax, Vat and various duties), Kansanshi has paid about $3 billion so far in taxes since operations first started in 2005. That’s about the same as it has invested in the mine itself.
And that investment is not about to end, as the mine has ambitions to boost its production even more. “We’ve always been in project mode and expanding,” says Meiring Burger, the mine’s assistant general manager. “We’ve never stood still.”
The objective is to process increased quantities of ore, and generally increase production streams. That’s what produces economies of scale and lower unit costs, says Burger. And this is all the more important as the mine is starting to encounter more lower-grade ore.
“If the policy and tax environment were to become more investor-friendly, we would be able to expand both Kansanshi, and our nearby Kalumbila mine, to produce in excess of 600 000 tonnes a year. That’s nearly Zambia’s entire current copper production,” says Burger.
He estimates that it would cost slightly less than $1 billion, take about two years and create 1 000 direct jobs – and nearly six times more additional jobs in the town and community due to the multiplier effect.
It seems as if Kansanshi has a golden future ahead of it.
