First Phase of Kamoto Copper Project on Track for Production Start


Copper concentrates from the Kamoto JV project’s mill began flowing to the Luilu metallurgical
plant in mid-summer 2007. The first stage of the three-phase project has cost an estiamted
$172 million and the combined cost of stages two and three are expected to require $202 million.
While the huge greenfield Tenke Fungurume copper project in the Democratic Republic of Congo has been center stage for some time, the brownfield Kamoto project in the Kolwezi district, about 220 km northwest of Lubumbashi, has also been attracting attention lately as the Kamoto Joint Venture is close to starting refined metal production.

Key mine components were ordered a year ago, the construction team build-up began in January 2007, and extraction commenced at the Kamoto underground and T17 open-pit mines in April. The 7.5- million-mt/y-capacity concentrator restarted in July and commissioning of the Luilu metallurgical plant got under way in September. Copper and cobalt output should start in the final quarter of 2007. Total reserves and resources (excluding inferred) are stated as 162 million mt at 3.5% copper and 0.38% cobalt, sufficient to support a mine life of at least 40 years at anticipated production rates. The average site cash costs, net of cobalt credits, are estimated at $0.20/lb copper, placing Kamoto close to the lower end of the global mine cost curve.

The Kamoto/Dima mining complex is one of a number of substantial copper operations that state-owned Gécamines was obliged to close. It comprises the Kamoto underground mine; the Dikuluwe, Mashamba East, Mashamba West and Musonoie-T17 oxide open pits; the Kamoto concentrator and the Luilu metallurgical plant as well as the related mineral properties. As the region’s political situation improved Gécamines sought to refurbish and rehabilitate the facilities, signing the Kamoto Joint Venture Agreement with Kinross-Forrest Ltd (KFL) to hold, redevelop, rehabilitate and operate the Kamoto JV Assets. The Kamoto JV received the approval of the Conseil des Ministres du Government de Transition of the DRC (the Congolese Government) on July 15, 2005.

The JV required that a feasibility study be delivered by KFL to Gécamines within eight months after the Kamoto JV has received all required regulatory approvals. This feasibility study, delivered in April 2006, projected a discounted rate of return on total capital invested to achieve a minimum of 150,000 mt of sulphide ore processed each month of not less than 20%. As per the JV terms, this enabled KFL and Gécamines to establish a DRC company to hold the Kamoto JV Assets. This is the Kamoto Copper Co. (KCC), initially 75% owned by KFL and 25% by Gécamines. KCC has a service agreement with Kamoto Operating Ltd. (KOL) whereby KOL purchases the equipment and materials for the project and was also to market and sell the production. Subsequently, Bermuda-based Katanga Mining Ltd. acquired KFL in stages, completing the deal and listing on the Toronto Stock Exchange in July 2006.

Katanga Mining, headed by Arthur Ditto, former president of Kinross Gold Corp., has offices in London, England. Katanga reports that capital investment in Phase 1 of the project, to first production, is $172 million. Phase 2, covering bringing roaster 1 online through 2008-2009 will require $97 million, and Phase 3, involving a second roaster and a dewatering program, will absorb $105 million. The final phase, costing $50 million, will take the operation to full rate production of 150,000 mt copper and 8,000 mt cobalt in 2011.

At the Kamoto underground mine, twin 6.5 x 6-m ramp declines provide access for trackless mining equipment and the shaft system can hoist 11,000 mt/d. Katanga Mining ordered a fleet of drilling, bolting, loading and haulage machines from Atlas Copco, including four Rocket Boomer 282 drifting rigs, four Boltec H235 machines, four Scooptram ST1520 LHDs and six Minetruck MT5010 haulers.

Work on the concentrator has involved South Africa’s Multotec in refurbishing the flotation plant. First, Multotec Zambia completed a detailed plant audit at the concentrator, making recommendations to the project manager Hatch as to how the rehabilitation should be carried out. The resulting supply contract included design of the level control system and delivery of the wetted parts of the new flotation mechanisms. A field service team assembled a prototype of the Wemco 120 unit in the concentrator to assist KOL personnel in setting up the rehabilitation process and later a Multotec commissioning team worked with operational and engineering personnel from the concentrator. Multotec will also train plant personnel on general inspection and maintenance issues on the flotation cells.


The rapid progress achieved by Katanga Mining in its lead role in the JV attracted unwanted attention. In late August 2007, Central African Mining and Exploration (Camec) announced that it had made an offer to purchase all of the issued and outstanding common shares of Katanga Mining on the basis of 17 common shares of the company for each Katanga share. Camec, which holds licenses in the DRC that were granted in 2004 under the new 2002 mining code, reportedly anticipated the offer closing on October 4, 2007. However, on September 5 Camec announced that it had decided to withdraw its offer because of the uncertainty relating to the DRC mining license regime which the government has been reviewing. In mid-September, Dow Jones reported that Vedanta Resources Plc, First Quantum Minerals Limited and Switzerland's Glencore International AG, all of which are already very active in the central African copperbelt, were close to putting in bids for Katanga Mining.

However, the target firm decided to review the strategic options open to it and in early October, having completed the review, Katanga Mining announced it had signed a term sheet for a $150-million one-year loan facility with Glencore International AG. The loan bears interest at LIBOR plus 4% payable upon maturity. During the one-year term, the loan is convertible at the option of Glencore into 9,157,509 (fixed number) common shares of the company. Katanga has the right to repay the loan at any time. The agreement also includes a ten-year offtake contract with Glencore for all the copper and cobalt production.

As featured in Womp 07 Vol 8 - www.womp-int.com