TORONTO (miningweekly.com) – Canadian base metals producer First Quantum Minerals on Tuesday said it would design and build an expansion to its 1.2-million-tonne-a-year copper smelter in Zambia, and that it would defer completing the Kansanshi sulphide expansion until 2017, when the smelter expansion was expected to be complete.

The company said that while the cost to export copper concentrate was high, it had become obvious that the availability of in-country, third-party smelting capacity is declining to the extent that even after its current smelter project had been completed, there would be insufficient capacity to process all the concentrate production from its Sentinel mine, currently under construction, and Kansanshi, where operations were recently expanded.

First Quantum said that despite planning being in the early stages, it expected the smelter expansion would increase throughput capacity by 800 000 t/y to two-million tonnes a year and benefit from shared infrastructure.

Meanwhile, construction at the new $690-million, 1.2-million-tonne-a-year copper smelter was approaching peak levels. Commissioning was expected to start in mid-2014, with the ramp-up continuing during the year. The smelter was expected to operate at 80% of its design capacity by mid-2015, and achieve full capacity early in 2016.

The new smelter would process a combination of concentrate from both Kansanshi and the new Sentinel mine. Output was budgeted at more than 300 000 t of copper and one-million tonnes of sulphuric acid a year.

First Quantum noted that in addition to the expected savings related to producing sulphuric acid, the proximity of the smelter to the mines was expected to benefit the company's overall transportation costs by between $130-million and $200-million a year.

MINE CONSTRUCTION

Further, expansion work to upgrade the Kansanshi mine's oxide circuit to 14.5-million tonnes a year was recently completed, and the first copper cathode was plated during November. The plant would, however, only ramp up to its full solvent extraction electrowinning (SX-EW) processing capacity once the new copper smelter at Kansanshi was operating and providing sulphuric acid as a by-product.

This by-product was intended for use in the SX-EW process, thereby eliminating the need to buy sulphur to produce sulphuric acid. This was expected to result in Kansanshi's saving operating costs of about $150-million a year.

The Sentinel project was also reported to be progressing on schedule and on budget towards commissioning in the second half of 2014.

Construction of the two required power lines and a substation were under way. The first power line, due for completion in mid-2014, was expected to provide sufficient power for the initial start-up production, while the second was expected to support full operations from the end of 2014.

First Quantum noted that at an estimated capital cost of $1.9-billion, Sentinel's capital cost per installed tonne of production was about $6 335, one of the lowest in the industry.

COBRE PANAMA

Meanwhile, First Quantum had undertaken a critical review of construction activities and had stabilised all activities at the Cobre Panama copper project, in Panama, since it bought it through a C$5.1-billion hostile takeover of rival Inmet Mining in March.

The company on Tuesday said its main focus was now centred on the critical elements of the project development, the construction and contracting plan, and implementation of practical site infrastructure.

First Quantum said that since that time, the project was transformed from an outsourced approach to a complete in-house, self-perform arrangement, where third-party engineers and contractors were now used only for specific tasks, and worked within the company's preferred project execution model.

The earthworks had been the subject of a critical review, as was the methodology of subsequent excavation and construction.

The company had bought significant quantities of on-site equipment from contractors whose contracts had been either cancelled or modified. This enabled First Quantum to fully control all site development activities, which provided for greater flexibility and significantly reduced risk.

Site accommodation, road access, communications and management are now all fully functional and allowing the major activities to advance efficiently.

The locations of key site infrastructure, including the processing facilities had been reviewed and an alternate, more practical plant site had been selected, which should be more cost effective to construct and allow for better access to the proposed in-pit crushing and conveyor systems for life-of-mine pits, and to the main access road, the company said.

First Quantum chairperson and CEO Philip Pascall said an update on the Cobre Panama project would be given early in 2014, which would reflect the culmination of a comprehensive review and the re-engineering of all aspects of the project's development, to ensure an appropriate return on investment and the most efficient use of financial and human resources.

“We had intended to publish the update earlier; however we have had to correct a number of acquired technical and logistical shortcomings so it is taking slightly longer than anticipated. Nevertheless, our priority is to make sure this project is positioned to allow its development to proceed in accordance with our exacting standards,” he said.

First Quantum’s stock was trading down C$0.44 apiece, at C$17.11 on the TSX on Tuesday.