A dimming copper dream suddenly burns bright
Mbongeni Mguni | Monday March 27, 2023 06:00
Since the base metal meltdown of 2016, when a commodity price rout crashed operations at BCL Ltd, Discovery Metals and African Copper, the local copper sector has slowly and painfully pulled itself back up from the collapse.
As prices have picked up since, players such as Khoemacau Copper Mining and Premium Nickel Resources Botswana, located on the Kalahari Copperbelt and at the former BCL respectively, have led the base metal sector’s revival and are presently the most advanced projects.
Khoemacau put out its first concentrate in June 2021 and is already fine-tuning plans for a further $700 million expansion which will double its output to 130,000 tonnes by 2026. The mine snapped up Discovery Metal’s adjacent processor at Boseto and plans to further expand this capacity.
Other producers due to come on stream soon include Sandfire Resources’ Motheo Copper Mine which is being built for $259 million on the Kalahari Copperbelt, as well as African Copper’s former Mowana Mine, now renamed Kopano Copper after a takeover by new investor, Max Power Limited.
Between January and November last year, the value of the country’s copper exports reached P3.5 billion, nearly three times the amount exported for the whole of 2021. The difference between the two years was Khoemacau, which spent 2022 ramping up to its nameplate output capacity of 65,000 tonnes per annum. The revival of the mines, however, has left smelting activities behind, apparently ending the dream that had been sustained by BCL’s smelter and its iconic chimney stack. Many in the country had hoped that with the old mines coming on stream together with the new players on the Kalahari Copperbelt, the combined volumes could make a business case for a smelter to be used by all producers.
The mines have, however, explained their positions on smelting. “Before closure (of BCL) that smelter was pushing sulphur dioxide into the air and that is not attractive to any investor anywhere in this era,” Premium Nickel Resources Botswana director, Montwedi Mphathi told Mmegi previously. “There would be a requirement to finance a sulphur capture plant and you would need to invest in an acid plant, which would require massive amounts of money and a guaranteed offtake arrangement to avoid stopping production or letting the sulphur dioxide up the stack when the storage is full.
“Each part of the project must pay for itself.”
Mphathi, who was BCL’s general manager between 2003 and 2010, knows the upcoming mine’s operations intimately. “Premium Nickel Resources looked at rebuilding the smelter, but you cannot operate it like before without sulphur capture, which in turn is an added capital expense and which does not justify being spent, based on the current size of the resource.” More recently, Khoemacau directors, who are focused on the mine’s $700 million expansion, equally played down the possibility of moving into smelting. Khoemacau Copper Mining CEO, Johan Ferreira, detailed the dilemma the new producer finds itself in.
“Look at the capital required,” he told Mmegi.
“One billion, two billion dollars to put up a smelting facility. “But it’s all big machines and heat that’s doing the work. So how many people will you really employ and what benefit will you get out of doing it? “Us going the expansion route and growing the mine is basically doubling our employee base from 1,000 to 2,500 maybe 3,000, which is much more value add for Botswana, than to go into a technology where first of all you can’t fill that smelter unless you get material from all over southern Africa and secondly, the right composition of material because you can get high sulphide grades that are volatile.” For Khoemacau as a relatively young player in the copper industry, the strategy is to stick to what it knows best. “Smelting would be a whole different ball game,” Ferreira said. “We know mining and that’s where we want to concentrate on. “Rather grow the mines, double employment and create further value such as skilling our people.”
As unpromising as the situation looks, plans have been quietly going on behind the scenes that could result in the country skipping a rung up the ladder of value addition in copper. According to Botswana Chamber of Mines CEO, Charles Siwawa, an Australian company is due to finalise a bankable feasibility study into the establishment of a copper refinery in Botswana, by December.
The latest efforts date back to a pre-feasibility done by the Chamber in 2015 which showed that volumes at BCL, African Copper and Discovery Metals could support the establishment of a refinery. Preliminary findings by the Australian company suggest the production expected to come out of the country’s copper producers could support a refinery. “We are confident that by the end of this year, we should be able to produce that feasibility study,” he told Mmegi. “The indications are still positive and we are even looking at locations and where the materials will come from, which the study will inform. “We are not talking about a smelter, but a refinery which is beyond a smelter and which will produce 99.9% copper in the country. “We will be able to sell that copper to manufacturers, who include those producing copper cables, household items and others. “The downstream industries and the value chain from that will be taken to its logical conclusion.” The Chamber of Mines envisages the refinery being developed via a ‘Business to Business’ arrangement, with no recourse to government. “The Australian company’s take is to say ‘if this thing is bankable, they will do it themselves’.
“That’s the reason why they took the project over themselves and negotiations are already taking place where they are going to look at funding, power sources and others because they have such confidence in this thing being feasible.
“This is a business issue and it’s better dealt with business to business. Only when we have failed can government be approached as a last resort. “Let it work as a business to business and if it makes sense, it will click; however, if one party is not fair in the negotiations, that’s when government can be approached.” For the Chamber of Mines, the dream of adding value to the base metals industry has never died. Siwawa says producers such as Khoemacau are correct in preferring to focus on their core competencies of mining. However, the Chamber, as the umbrella body, has to look at the broader industry’s aspirations, particularly as government has identified technology-driven beneficiation as a national priority. “This question of value addition goes back to the early 2000s at the African Union and the issue of Africa’s mining vision,” he said. “Botswana is a signatory to that and the concept was that as Africa we should not be taking our mineral resources out of the continent for beneficiation elsewhere.
“When you look at the value chain, the greater values are always achieved post-mining, which is the point President (Mokgweetsi) Masisi was talking about recently on diamonds.
“This concept can be extended to copper and base metals. “We have not run out of time.”