First Quantum Mulls $500 Million Zambia Copper-Smelter Expansion
Stock Chart for First Quantum Minerals Ltd (FM)
First Quantum Minerals Ltd. (FM), a copper and nickel miner, will decide this year whether to spend $500 million to boost its Zambian smelter’s capacity two-thirds after the government reinstated an export tax on raw minerals.
“We’d like to have it done and dusted for a decision this year,” Matt Pascall, First Quantum’s operations director, said today by phone from Cape Town. “We’ll have something to take to the next board meeting at the end of December.”
The Vancouver-based miner is spending $650 million to build the smelter in Solwezi, in the northwest, to process minerals stored up after a capacity shortage in Zambia, Africa’s biggest copper producer. Finance Minister Alexander Chikwanda lifted a 10 percent tax on concentrate and ore exports on Oct. 4, only for President Michael Sata to reinstate it three weeks later.
A larger smelter may increase First Quantum’s processing capacity in Zambia to 2 million metric tons a year. The cost estimate for the expansion is based on building a neighboring smelter, First Quantum President Clive Newall told analysts today on a call. The miner is studying the best option, he said.
The company is considering the project due to the expense of transporting low-value concentrates out of the land-locked country, rather than because of pressure from the government, Pascall said. Concentrates contain about 30 percent copper while smelters produce a product that’s higher than 95 percent.
First Quantum’s first smelter will have capacity to produce more than 300,000 tons a year and is set for completion in 2014.
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