Burkina Faso's gold industry is set to decline, says the CEO of West African Resources. Boukary Diallo has attributed the downfall to militant ... attacks that have intensified this year as well as Russia's Nordgold shutting the Taparko mine in April.
The company, Zambia’s largest copper producer, will apply for new exploration licenses late in 2022 or early in 2023, says Pascall, who took over as CEO in May. “We’ve seen a real turnaround in the country,” under Hichilema, Pascall says. The business environment has “definitely improved in the last 12 to 18 months” after five years of “stagnation” in copper output.
Hichilema, elected president in August 2021, has targeted raising copper production to 3 million tons a year from about 800,000 tons last year. His reforms to date include ending a “double taxation” policy under which mining companies paid corporate tax and royalties. Mines Minister Paul Kabuswe said in October he plans to limit the number of licenses which a company can have to five to prevent speculative license holdings which prevent exploration.
First Quantum’s 2021 copper output of 816,000 tonnes made it the world’s sixth-largest copper producer. The company employs about 20,000 people globally. Its main assets are in Zambia and Panama with smaller operations in Spain, Mauritania, Australia, Turkey and Finland. The company in May announced plans for a $1.25bn expansion of its Kansanshi mine in Zambia, which produces more copper than any other African mine. The expansion is designed to extend the mine life for two decades, and “underlines our confidence” in the country, Pascall says.
Kansanshi is near Solwezi in Zambia’s North Western province. The company also operates the Sentinel open-pit copper mine, 150km west of Solwezi. Sentinel was built between 2012 and 2016 with investment of over $2bn.
- The company’s Enterprise nickel sulphide deposit is 12km northwest of the Sentinel mine, with proximity allowing existing infrastructure to be shared.
- Proven and probable reserves at Enterprise total 34.7 million tonnes of ore. Pascall says the Enterprise project will become Africa’s largest nickel mine and potentially make the company one of the world’s top ten nickel producers.
- Uses of nickel include lithium ion batteries, carbon capture and storage. The metal is highly recyclable, and, according to the Nickel Institute, about 68% of all nickel in consumer products is later put to a new use.
- First ore at Enterprise is targeted early in 2023, with ramp up in the course of the year. The mine has the potential for annual production of over 30,000 tonnes, Pascall says.
A slowing global economy means the short-term outlook for copper prices is muted. Fitch Ratings in September cut its 2023 London Metals Exchange forecast price to $8,000 per tonne from $8,500. That reflects prospects for weaker short-term demand, which is likely to mean a small copper surplus in 2023, Fitch said.
Chinese copper demand is still being held back by lockdowns prompted by the country’s “zero Covid” policy and a decline in the country’s construction sector. But medium-term global prospects are “solid” due to the energy transition, which will account for 50% of global copper demand growth over the next five years, Fitch says.
The world needs more copper for uses such as wind power, and the metal will be needed to help improve the range and reliability of African national grids, Pascall says. It’s hard to find substitutes for copper, but the global discovery rate is slowing down, he notes. Whereas 100 years ago grades of between 4% and 5% were common, yields are now often around 1% or less. That means larger volumes are needed for projects to be economical, meaning more capital is required, Pascall says.
Zambia has a “window of opportunity” but still needs to overcome its logistics challenges to make the most of its opportunity, with the transport system having deteriorated over the last decade, Pascall says. The railway network is “undermaintained” and trucks from the company’s Zambian operations take about two weeks to reach ports at Richards Bay in South Africa, Walvis Bay in Namibia and Tanzania’s Dar es Salaam, he says.
There is a global need for two or three Sentinel-size mines coming on stream every year to meet demand, Pascall says. But higher regulatory and compliance requirements in areas such as biodiversity, which Pascall welcomes, are contributing to the fact that it now takes an average of 16 years to get a new mine built. In the years after 2025, it’s hard to see where the new mines will come from, he adds.
- Copper recycling will need to increase in future compared with current rates of between 20% and 40%, Pascall says.
- He notes that copper is not part of the US Inflation Reduction Act, which targets a 40% reduction in US carbon emissions by 2030 versus 2005 levels.
- The US and Europe and only now “starting to wake up” to the need to ensure the supply of minerals such as copper, nickel, tantalum and rare earths.
Global energy transition gives Zambia a unique chance to use copper and nickel to drive national economic development.
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