Lumwana, which has been declared a national priority project by the government of Zambia, will result in its owner, Australianbased and Toronto Stock Exchange listed Equinox Minerals, becoming one of the world’s top 20 copper producers.

The planned production of 169,000 mt/y of copper for the first six years and the project’s fortuitous timing in the commodities cycle means Lumwana should be able to repay its more than $584 million bank debt in less than a year at current copper prices. The successful development of the project also prompted rival First Quantum Minerals, which owns the Kansanshi mine near Solwezi 65 km to the east, to take an unsolicited 17% stake in Equinox.

In developing Lumwana, Equinox, which has no other operating mines, had to overcome significant skepticism. Doubters said the orebody was too low grade, the project would never succeed in attracting the more than $800 million required to fund development of the mine and fleet, and Equinox would not succeed in finding the necessary customers.

However, while low grade, the total mineable reserve at Lumwana of 200 million mt containing 0.62% copper is metallurgically easy to process, and off-take agreements were secured with two local smelters—Glencore International’s majority owned Mufulira smelter and China Nonferrous Metal Mining (CNMC)/Yunan Copper’s 150,000 mt/y nameplate capacity smelter being built at Chambeshi. The Chambeshi smelter will take 55% of Lumwana’s concentrate based on a five year take-and-pay contract. The Mufulira smelter will take the remainder on similar terms. It is envisaged that the initial Chambeshi concentrate will be transported to China, as the Chambeshi smelter, the first being constructed by a Chinese group abroad, is not scheduled to be ready until early 2009.

The Lumwana concentrate will be trucked along a good quality bitumen road to the smelters which are situated in the main Copperbelt. An option Lumwana may consider in the future is the construction of a slurry pipeline to the smelters, which will save on transport costs that come to some $0.05/lb.

The Lumwana deposit, found in 25- meter (m) wide ore zones, will be extracted from two open-pits using bulk mining methods with the only selective mining to be implemented on a planned future uranium yellowcake (U3O8) project. The higher grade Malundwe pit, comprising a total reserve of 121 million mt containing 0.89% copper of which 42.9 million mt at 1.09% copper is proven as opposed to probable, will be mined for the first six years. Mining at the Malundwe pit will be done in 8- to 12-m benches and the average strip ratio over the life of the Lumwana mine is expected to be 7:1.

Equinox said the total operating cost for concentrate production is still expected to be less than $1/lb of copper produced, higher than the originally estimated $0.78/lb due to increased fuel and spare parts pricing.

The concentrate derived from the Malundwe orebody will contain 41% to 45% copper and when the second pit, Chimiwungo, is developed in a few years it will produce a concentrate containing 28% to 32% copper. The ore body dips at 20° to 25° and the Malundwe pit length could extend in total 4.8 km or beyond depending on how far exploration shows the strike, which remains open, extends.

The processing at Lumwana benefits from very coarse sulphides (280 micrometers) and the project even looked at 320 micrometers, with the bornite chalcopyrite ore being easy to crush and grind. The ore floats readily and quickly so the flotation circuit will achieve a greater than 95% recovery at relatively coarse grind.

Lumwana is spending $70 million to build a town for its employees—Zambia’s first new town since independence.

Commercial mining began at Lumwana in July this year with all the 27 Hitachi 240-mt-payload EH4500 trucks in place. Lumwana is expecting 90% fleet availability with 24 of the 27 trucks to be in operation at any given time when full scale mining is underway. The operators of the trucks, excavators and hydraulic shovels, most of whom have never driven a mechanized vehicle in their lives, are being trained using four Immersive Technologies simulators; Lumwana is the only mine in the world with four on site, each costing $400,000.

Overall, the fleet cost is $161 million and while Hitachi has provided the main mining fleet—its biggest contract in Africa—Caterpillar supplied the auxiliary equipment and Sandvik the drilling machines. Contracting was never an option as no contractor owned a trucking fleet of sufficient scale. Lumwana has a 140-mlong, eight-bay maintenance workshop, two bays configured with rails to service tracked machines.

Due to long lead times on spares and equipment, the mine will stock spares worth $20 million. In addition, Lumwana will not escape the industry wide 30% operating cost inflation costs. This is reflected in the cost of grinding media having escalated from $700/mt to $1,000/mt. “The operating cost increases from mid 2005 stretching through to 2007 did show a 30% a year increase, but there are signs this is levelling off,” Michael said.

He also said the strategy of having vertically integrated construction package contracts, with a South African company called Tubular undertaking the electrical, mechanical structural and piping contract, has been successful. The civil engineering for Lumwana was undertaken by a joint venture between Group 5 and WBHO. The latter also won the earthworks contract. Sandvik undertook the conveyor design contract and Siemens the PLC/SCADA control system for the project.

Some of the Hitachi EH4500 trucks that form part of Lumwana’s mining fleet.

The Lumwana substation has three 95- MVA transformers of which one is sufficient to supply the project. Michael said that the nominal power requirement to achieve the project’s 20 million mt/y ore production and processing rate will be about 90 MVA. This is evenly split between the mine and the plant.

Lumwana will use an electric trolley assist system for its truck fleet. Over the life of mine this measure will save Lumwana at least $650 million, this having been based on a $70/barrel oil price. The initial impacts will be low but will progressively increase as the pit gets deeper and the waste dump higher. It will be important for the mine to ensure that the roads used by the trolley assist trucks are in good shape and Lumwana is considering an oil-based emulsion product known as Dust-a-Side as an option.

However, the trolley-assist does mean that should cutbacks in power supply to the mine take place, as recently happened in South Africa, production would become more expensive but tonnages would be maintained. This scenario is unlikely in Zambia as brownouts of many hours duration have been a regular feature in Lusaka, the capital city, and elsewhere for some years, and the mining industry had not been asked to ration power. Fuel supply is by BP Zambia which has constructed two 3 million liter tanks on site that combined, will hold two month’s supply to the mine.

Lumwana will have a more-than-adequate supply of water. The main dam constructed to supply water to the project has a 28-m highwall which will rise to 62 m over time. The dam itself will extend 5 x 2 km and contain 568 billion m3 of water, with some 3 billion m3 used as uptake by the mine. Fishing and other commercial use development will be supported on the dam.

View of water separation dams, from the top of the Lumwana plant.

The Lumwana explosives supply contract was the largest order ever signed by South Africa based explosives supplier, African Explosives Ltd. (AEL). “The contract for the supply of explosives to Lumwana covers 10 years and is worth $280 million over the full term,” AEL Zambia Managing Director Wayne Du Chenne said.

Du Chenne said the company is investing nearly $6 million to develop the infrastructure that will allow it to produce and deliver the required quantities of bulk emulsion to Lumwana each month. AEL’s on site bulk explosives manufacturing plant, commissioned in July 2008, has a capacity of 3,000 mt/m of bulk emulsion.

Designed for Expansion
With most of the plant having been designed to cope with more than 20 million mt/y, the possibilities of expanding production to 24 million mt/y is being considered with future expansions of up to 35 million mt/y also possible.

Ore will be supplied to the plant via a 4,500 mt per hour (mt/h) 4.5-km conveyor, powered by motors with a total rating of 4 MW. The conveyor comprises some 400 mt of rubber belting.

Lumwana under construction in early May 2008.

The flotation circuit is similar in design to that used by Chile’s Escondida copper mine and consists of two banks of seven 160-m3 rougher cells, followed by seven 50-m3 cleaner cells and five 17-m3 recleaner cells. The flotation recovery is anticipated to be 96%. The mine’s Larox filter presses were specified to process 1,200 mt/d, or 78 mt/h, which translates to 15% over the peak output from the Malundwe pit at 90% availability.

A fact that provides the Lumwana team with confidence is that the plant design, though it was looked at successively by Kvaerner, Minproc and then Ausenco, which is in joint venture with Bateman on the EPCM contract, did not change much in its detail as engineering progressed. “We are using the leeway provided by the six month ramp up phase to see that we know exactly what the plant is capable of,” Michael said. “We are not looking to break any production records during this initial period.”

Exploration Near Lumwana
First Quantum’s Kansanshi mine adjacent to the Solwezi dome and Equinox’s Lumwana mine adjacent to the Mombezhi dome are unlikely to be the only mines developed in the northwestern extension of Zambia’s Copperbelt. The infrastructure that has developed as a result of the two mines means that the north-western Copperbelt extension is a popular exploration destination. One of the companies exploring in the area, AIM-listed Kiwara, which recently made the Johannesburg Stock Exchange (JSE) its primary listing is drilling on a 5,500 km2 property that covers a significant portion of the Kabompo dome, the next major geological feature to the west of Lumwana.

The Kabompo dome is one of three major mid-proterozoic domes or inliers in the north-western part of Zambia and the other two host mines. Not only are more mines likely but Kiwara CEO Peter Vivian- Neal said he would not be surprised if one day someone establishes a smelter in the northwestern extension of the Copperbelt.

Part of the flotation circuit at Lumwana.

Kiwara’s license area is surrounded by license areas owned by companies such as Equinox, which itself is spending half of its $15 million exploration budget outside its 1,355 km2 Lumwana mining license. The geology in this area is more challenging than the parts of the Copperbelt familiar to Konkola, with more faulting, shears and thrusts, and Kiwara finds it is constantly reassessing its geological model.

Kabompo differs from the other two dome features in that the mineral resources it hosts appear to be more polymetalic, with Kiwara having identified wide zones of copper, nickel, cobalt and uranium mineralization at various locations within its licence area. Vivian-Neal also refers to lead and zinc mineralization, as well as iron ore; which was the subject of a feasibility study in the 1970s by a Yugoslavian-Zambian joint venture.

Coping Within Zambia’s New Mining Tax Regime
Lumwana believes it is well placed to cope with Zambia’s current mining tax regime. An escalated tax regime was passed by Zambia’s parliament and affects statutory tax, royalties, windfall taxation and taxes on exports of concentrate. Even some Zambian government officials, when they are being candid, admit this new mining tax law is flawed. It is becoming a politically sensitive issue and there are likely to be court cases against the government by some companies in Zambia. The new tax laws, taken in their entirety, appear only to take into account investor returns during periods of favorable and higher copper prices.

Such laws, unless amended, will inhibit further exploration and/or development projects in Zambia. As the impact becomes more widely understood, the new mining tax regime may well be restructured to provide a more balanced share of profits.

However, Lumwana is trying to avoid any confrontation with government and Michael said that discussions between government and Equinox have revolved around implementation of the existing development agreement conditions, and he appears confident the project will escape most of the new escalated taxation regime. Key elements of the original development agreement Equinox signed that are being honored by the government include tax free fuel, tax free power, import duties removed off plant and material required for the project, and the deferral of taxes until Equinox has paid off its bank debt. “We can confirm now that this is a process of implementation not of negotiation,” Michael said.

According to Michael, although the government does not want to create public perceptions that it is favoring any particular company, the new tax-laws were instituted with certain other companies in mind; companies that have been making windfall profits and have not been perceived to have invested much toward Zambia’s social and economic development or contributed much in infrastructure. Michael suggests Equinox’s Lumwana copper project is a special case and one that will eventually be granted dispensation.

Lumwana, after all, “has not yet enjoyed such profits. We’re delivering Zambia’s single largest capital investment in mining since independence, we’re building substantial infrastructure and creating social and employment opportunities, all in a greenfields region that was bush before we commenced almost 10 years ago,” said Michael.