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(MINEWEB) Mega miner in Zambia with African Rainbow Minerals

Mega miner in Zambia with African Rainbow Minerals
Vale, the world's No 2 miner, further spreads its rapidly growing African wings with the build launch yesterday of the Konkola North copper mine, with partner ARM.
Author: Barry Sergeant
Posted: Friday , 15 Oct 2010
JOHANNESBURG -

Johannesburg-listed African Rainbow Minerals (ARM) Thursday launched with its 50:50 joint venture partner Vale, the world's No 2 miner by value, the build of the Konkola North copper mine in Zambia, extending ARM's reach into the continent from South Africa, and confirming again that Vale has big ambitions on the continent.

The project's capital expenditure is put at about USD 400m, with production set to reach full capacity in 2015. Estimated nominal capacity is 45,000 tonnes a year of copper in concentrate, to be toll smelted in Zambia, Africa's biggest copper miner. Expected mine life is 28 years, with potential to increase output to 100,000 tonnes a year from 2020.

Confirming the Konkola North build in August, Vale said its investment "will be leveraged by Vale's extensive track record in developing successful large-scale mining projects in tropical environments. The project development is consistent with our goal to become one of the largest copper producers in the world".

The investment also reflects the kind of integrated logistics strategy Vale knows so well from its northern iron ore system in Brazil. In September, Vale said it had exercised an option to buy a 51% stake in Sociedade de Desenvolvimento do Corredor do Norte SA (SDCN), owned by the Mozambican company Insitec. The transaction was seen as enabling "the necessary logistics infrastructure for transporting the output from the second phase of the Moatize coal project (Moatize II) development".

Moatize, in north eastern Mozambique, is a coal deposit with proven and probable reserves of 1.087bn tonnes. Moatize I has a nominal production capacity estimated at 11m tonnes of coal, 80% metallurgical, with start up expected during the first half of 2011. Capital expenditure has been put by Vale at USD 1.7bn. In the first phase at Moatize, coal will be transported by the Linha do Sena railway to the Beira port.

SDCN controls the Corredor de Desenvolvimento do Norte (CDN) and the Central East African Railways (CEAR). CDN holds a concession over 872km of railroad in Mozambique; CEAR holds a concession over 797km of railroad in Malawi. The CDN and CEAR rail systems are connected near the mineral region of Moatize, in the province of Tete. Australia-listed Riversdale Mining is also busy in the region with a big potential coal mine build, as are ENRC, Nippon Steel, Jindal and ETAStar.

Vale aims to build on the logistics infrastructure, seen as "an excellent alternative for transporting to the east coast of Africa from the copper belt of Zambia", which includes of course, Konkola North. The rail system is also seen as useful for Vale's Evate phosphate rock project in Mozambique, and other cargo from Zambia-Malawi-Mozambique.

Vale is to further invest in the Nacala (Mozambique) logistics corridor, through the construction of railway links needed to ensure transport of production from Moatize. Vale will also invest in the new deep water maritime terminal in Nacala. These plans are seen as "an integrated part of Vale's strategy to build efficient logistics infrastructure to support the growth of its activities with high potential for value creation".

Vale has so far restrained itself from involvement in the Democratic Republic of the Congo, which hosts its section of the central African copper belt across the Zambian border, in Katanga Province. The biggest copper belt miner, Toronto- and London-listed First Quantum, is currently involved in disputes on the DRC side of the border. Both the DRC and also units of London-listed ENRC are defending arbitration and litigation actions initiated by First Quantum.

First Quantum Thursday announced, in effect, the go-ahead for the Sentinel copper mine build in Zambia, giving a further thumbs up for mining security of tenure in the country. In a statement, First Quantum said on Sentinel that "based on our experience with other development projects", it expects the capital cost to develop, including the necessary infrastructure, to be in the range of USD 600m to USD 800m, but indicated that a larger investment could be on the cards.

In West Africa, Vale recently entered into contracts with the government of Liberia for the construction of an integrated railway-port system for transporting the proposed moving of iron ore from Simandou, in Guinea. On 30 April Vale agreed to pay USD 2.5bn for a 51% stake in BSG Resources Guinea, which apparently holds rights to blocks 1 and 2 in the Simandou iron ore system, Guinea.

Simandou is now recognised as one of the most important mineral discoveries of the decade. Rio Tinto, which discovered Simandou in 2004, had claimed a 95% stake in all four Simandou blocks, seemingly until December 2008, when soldiers took Guinea over. The country is reverting to democracy. Rio Tinto has strongly asserted that its rights at Simandou have remained intact.

Selected DRC/Zambia stocks

Copper-cobalt


Stock


From


From


Value




price


high*


low*


USD bn

NFC


CNY 30.89


0.0%


179.3%


2.967

First Quantum


CAD 83.44


-16.8%


73.1%


6.700

Katanga Mining**


CAD 1.46


-12.0%


165.5%


2.773

Equinox


CAD 6.11


-2.4%


99.0%


4.307

Metorex


ZAR 4.41


-17.6%


57.1%


0.650

Anvil**


CAD 4.06


-4.9%


66.4%


0.608

Mwana Africa


GBP 0.12


-33.8%


68.3%


0.091

Tiger Resources


AUD 0.37


0.0%


155.2%


0.219

African Copper


GBP 0.06


-42.3%


45.2%


0.074

Africo**


CAD 0.86


-42.3%


13.2%


0.061

Caledonia


CAD 0.09


-10.5%


70.0%


0.042

African Eagle


GBP 0.06


-9.4%


77.8%


0.037

Geovic***


CAD 0.95


-4.0%


72.7%


0.099

El Nino Ventures


CAD 0.08


-54.3%


166.7%


0.006

Averages/total





-17.9%


93.5%


18.635

Weighted averages





-10.5%


101.0%




Gold stocks













Banro**


CAD 2.92


-7.9%


82.5%


0.503

AngloGold Ashanti


USD 47.48


-1.4%


39.2%


18.089

Randgold Resources


USD 104.81


-1.5%


64.9%


9.528

Mwana Africa


GBP 0.12


-33.8%


68.3%


0.091

Mexivada****


CAD 0.16


-44.6%


47.6%


0.007

Gilla Inc.


USD 0.05


-64.3%


257.1%


0.001

Loncor Resources**


CAD 1.75


-2.2%


169.2%


0.075

Diversified













Freeport-McMoRan


USD 99.68


-0.7%


75.8%


46.893

OM Group


USD 32.75


-16.2%


49.1%


1.011

Vedanta


GBP 23.02


-22.4%


28.2%


9.752

Lundin


CAD 5.79


-0.7%


99.0%


3.344

ENRC


GBP 9.41


-26.3%


17.5%


19.370

* 12-month ** DRC only *** Cameroon **** Congo-Brazzaville




Source: market data; table compiled by Barry Sergeant

Labels: AFRICAN RAINBOW MINERALS, MINING, VALE

posted by MrK @ 5:54 PM