Vedanta to scale up $1 bn investment plan for Konkola Copper Mines in Zambia for developing new facilities, says CEO

New Delhi: Vedanta Resources, the mining and energy company controlled by Indian billionaire Anil Agarwal, proposes to scale up the $1 billion investment in its Zambian copper unit to develop multiple tailing leaching facilities required to enhance copper production from secondary sources, said CEO Deshnee Naidoo in an interview.

The plan is to capture large secondary sources of copper, such as tailings from Konkola Copper Mines (KCM), which will help Vedanta enhance copper production at its Zambian copper unit. Vedanta acquired KCM in the early 2000s but regained control only last year, following an extended period of differences with the Zambian government and a legal battle over the control of KCM.

A tailing leaching facility for copper is a site that utilises chemical or biological processes to extract copper from waste materials known as tailings, which are the byproducts of mining operations.

Naidoo stated that the KCM site in Zambia also features one of the largest tailings leach plants in the world. “The world is getting excited about treating secondary material. KCM has been doing tailings leach for decades and has a production capacity of 70,000 tonnes. We are now looking at de-bottlenecking tailings leach operations and setting up other leaching plants based on tailings in that area on a fast-track basis. The investment in these would be scaled up on an as-and-when basis above the stated investment proposed for KCM,” she said.

Zambia investment

Vedanta has proposed a $1 billion investment over a five-year period to operationalise and scale up copper production from KCM after regaining control last year. The Zambian unit has already started producing an initial lot of copper. KCM has a potential capacity of 10 million tonnes, while Naidoo said that with Vedanta’s initial round of investment, copper production at KCM would reach 300,000 tonnes in two to three years, while production would keep rising thereafter through investment in improving KCM’s mining and other infrastructure facilities.

“It takes about 15-20 years to explore and find deposits in a mine. Another three years is taken to build a shaft. At KCM, we have all that now. Also, the KCM ores have rich copper deposits of 3.5% against other global announcements of 1%, 0.7%, O.8% deposits. This puts us at an advantage over competition,” Naidoo said.

Zambia is currently the second-largest copper producer in Africa and the seventh-largest globally. Its ore deposits are among the highest quality and largest in the world. Many of its deposits have yet to be mined.

Demand for copper, as a conductive metal present in almost all electrical components, is increasing at an unprecedented rate. Citing a Citi report, Naidoo said that copper prices are projected at $11,000 per tonne early next year, which could increase to $13,000 per tonne. This is because the gap between demand and supply is expected to enlarge next year. “So, we are investing in the right project at the right time in Zambia,” Naidoo said.

Investing in copper mines abroad is a good proposition for Indian companies if the metal's recovery is robust and the infrastructure is well-developed, said A. S. Firoz, former steel ministry chief economist and a metal sector expert. “Although copper prices are traded on the LME and fluctuations are seen due to the cyclical nature of the sector, the movements are less varied, as demand remains firm. Also, reports suggest copper prices are expected to firm up further next year. So, any investment in copper mines would present big business opportunities for companies,” he said.

Vedanta had already announced an investment of over $9.5 billion a couple of years ago to expand its operations across various businesses, including aluminium, zinc, iron ore, oil, and power, in India. It has added another $1 billion in fresh investment to expand Hindustan Zinc's capacity to 2 million tonnes.

Of the overall investments, around $6 billion has already been spent largely to scale up aluminium production and alumina refining. The balance will further strengthen its aluminium and zinc businesses while increasing production of critical minerals, largely from 10 blocks it has secured from the government through the auction process.