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Vedanta’s Zambian Unit to Move First Copper by Rail Since 2008

April 03, 2013

Vedanta’s Zambian Unit to Ship First Copper by Rail Since 2008

Copper is cast at the Nchanga smelter operated by Konkola Copper Mines Plc, a unit of Vedanta Resources Plc, in Chingola. Photographer: Matthew Hill/Bloomberg

Vedanta Resources Plc (VED)’s Zambian unit will transport copper from its Chingola mines to Tanzania by rail instead of road for the first time in five years to lower costs.

Konkola Copper Mines Plc plans to ship 70,000 metric tons of the metal using trains by March next year, Joy Sata, a spokeswoman, said in an interview on April 2. The company plans to move the majority of its copper by rail eventually, she said.

“The cost savings will be huge,” Sata said in Chingola, 320 kilometers (198 miles) north of Lusaka, the capital. “It will reduce the transport cost tremendously.”

Railway operators in Zambia, Africa’s biggest copper producer, plan to invest over $1.5 billion over the next five years to upgrade the system that President Michael Sata on Nov. 15 said had “deteriorated beyond description.” The government plans to move freight back onto the railways to ease traffic congestion and reduce maintenance costs of the road network.

KCM, as the company is called, transports 70 percent of its copper by truck from Chingola to Kapiri Mposhi, about 210 kilometers away, Sata said. The metal is then transported by rail to the Tanzanian port of Dar es Salaam, about 1,400 kilometers northeast, she said.

The remaining 30 percent of the company’s copper production is exported almost 2,500 kilometers by road to the port of Durban in South Africa.

KCM, in which Vedanta has a 79 percent stake, plans to start copper production from two new open pits in Chingola by the end of the year, Mineral Resources Manager Ashok Singh said in an interview. The company is also increasing underground production there, in an expansion that will raise copper output to about 200,000 tons yearly from its mines in Chingola, he said. This will cost $200 million to $300 million, he said.

Chililabombwe Deepening

KCM is also completing a deepening of its underground mine in Chililabombwe, about 21 kilometers north of Chingola, which will increase copper production at the operation to about 200,000 tons a year. The mine extends 1,505 meters below surface, making it one of Africa’s deepest copper operations, according to the company. It is also one of the wettest, and has to pump out 320,000 cubic meters (85 million gallons) of water daily, equal to about 128 Olympic swimming pools, according to Billy Sakala, a manager at the mine.

Vedanta shares climbed 1.7 percent to 1,009 pence by the close in London yesterday, paring the decline this year to 13 percent.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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