AN improvement in operating conditions in Zambia, including a 15% reduction in the electricity tariff, has given UK-listed mining group, Vedanta, confidence to start trial mining ahead of the reopening of its Nchange copper mine.
In addition to lower energy costs, the country has also softened its royalty system while electricity supplies could become more stable following an improvement in water levels at Kariba.
“Copperbelt Energy Corporation [an independent power distributor operating in Zambia] has recently announced revised power tariffs effective from January which are 15% lower than the last tariffs that were announced in 2016,” Vedanta said Monday.
In 2016, the power tariff for copper miners in Zambia, which has First Quantum Minerals among their ranks, surged from 8.2 US cents to 10.35c per kilowatt hour driving production costs higher.
Commenting on the trial mining at Nchanga – which Vedanta put on care and maintenance in 2015 – the UK group said the initial results for recovery and mining productivity pointed towards viability.
“The plan is to ramp-up the annual ore production to a rate in excess of two million tonnes,” it said. Copper production in the three months ended December was 33% lower on a year-on-year basis at some 21,000 tonnes.
This was owing to “lower production from Nchanga underground” as well as “lower trackless equipment availability at Konkola mine”. Throughput constraints at the mills and lower feed from reclaimed tails at the Tailings Leach Plant also suppressed production volumes, it said.
Production was further impacted by a biennial shutdown of the smelter for 40 days although operations have now recommenced, with smelter availability improving to 98%, enabling it to process more than 90 tonnes per hour.
In the quarter, Vedanta had revenue of $206m – 5% higher on the prior year owing to improved mineral prices, although this was partly offset by lower production volumes.
Copper miners in Zambia have also benefited from new royalties approved in 2016.
The new regime provides for a ‘sliding scale’ royalty rate which turns on the price of copper.