Monday, March 23, 2009

Firms vie to run shut Zambia copper mine

China's NFC Africa, Britain's Lion Finance and Shanduka Group of South Africa are seeking to operate Zambia's Luanshya Copper Mine (LCM), which was shut down in December, Mines Minister Maxwell Mwale said on Thursday.

Mwale said LCM's creditors would meet on April 6 with the LCM managers to discuss debt repayment after which authorities would ask LCM to hand the mine back to the government.

Thereafter, the government will then open discussions with possible new investors seeking to operate the LCM, Mwale said.

"Lion Finance of the UK and Madini Copper Resources, a local company, NFC (Africa), the Chinese company and Shanduka of South Africa have all approached us to say they want to run the mine," Mwale said in an interview.

He said LCM, which operated the Baluba copper mine and Chambishi Metals, the country's largest cobalt producer before retrenching 1 700 workers and shutting down in December, would be reopened by the end of April.

Before placing LCM under care and maintenance, its owners Bein Stein Group and International Minerals Resources suspended the $354-million Mulyashi copper project, which was expected to start producing 60,000 tonnes of copper in 2010.

"It's the government's intention to ensure that the Luanshya mine starts (copper and cobalt) production at the end of April," Mwale said.

Mwale also said Zambian authorities would reject any attempt by Glencore International AG to sell the country's Nkana and Mufulira copper mines, which the company has proposed to close because they were operating at a loss.

Zambia wants Glencore to hand the mines to the government but industry sources told Reuters Glencore wants to sell the two units after the government rejected the plan to shut them.

"It appears Glencore and its partner First Quantum Minerals have proposed that they sell the mines as opposed to handing them back to the government, but the authorities are not keen on that one," an industry source said.

First Quantum Minerals has a minority stake in Mopani, which also runs the large Mufulira smelter.

There was no immediate comment from Mopani.

"It's not justifiable to place a mine under care and maintenance at copper prices around $3,700," Mwale said.

"We have had a long history of mining since the 1900s and I don't remember the mines closing down even during the (previous) economic depression. So we cannot allow our mines to be shut."

Copper jumped over 6 percent on Thursday, crossing $4 000/t for the first time in four months on optimism that demand for the metal would revive after the US Federal Reserve announced a new plan to fight the global recession.

Copper for three-month delivery on the London Metal Exchange rose to $3 980/t in rings from $3 755 at the close on Wednesday. It had hit a session high of $4 020 - its highest level since early November.

By Reuters - 19/03/2009