In Zambia, Canadian mining company First Quantum has signed a deal with the government to expand the Kansanshi copper mine, northwest of the country. The $1.25 billion deal was first agreed upon in January 2020 before the outbreak of COVID19 stalled it. First Quantum describes its decision to go ahead with the deal as having renewed confidence in Zambia’s investment climate.
According to First Quantum, the $1.35 billion deal is the largest investment in Zambia since its Sentinel project was approved in 2012. The company and the Zambian government have also agreed on outstanding value-added tax repayments owed to it and repayment formats based on offsets against future mining taxes and royalties.
The move is a much-needed relief to Zambia’s economy as it has been contracted as a result of its lingering debt crisis that has seen it call for a restructuring of its debts by various creditors. The administration of President Hakainde Hichilema has endorsed the Group of 20’s so-called Common Framework for Debt Treatment, which is aimed at assisting impoverished nations. Even after receiving preliminary clearance from the International Monetary Fund in December for a $1.4 billion assistance package, progress has been slow. The largest stumbling block has been China’s refusal to join the process
The total capital expenditures associated with the S3 Expansion at Kansanshi is expected to be $1.25 billion, which includes $900 million on the S3 plant and mine fleet and $350 million for pre-stripping of the South East Dome pit. The first production of copper from the expansion is expected to commence in 2025.
Zambia is Africa’s second-largest producer of copper and is aiming to increase its output to 3 million tonnes per year by 2030.