Reviving major operations in African copper, zinc, and iron.
You have recently appointed as chief executive officer for Vedanta Resources. Can you provide us with a brief overview of your company, which is listed on the London Stock Exchange, and specifically your operations in Africa?
Tom Albanese (TA): I have been involved with Vedanta Resources since September 2013 and as chief executive officer for the past few months. I am committed to see some of the Vedanta Resources businesses continue on the path of success or in some cases achieve their full potential. Vedanta Resources is primarily an Indian company in terms of its span of operations, but it has a global footprint in several ways. First of all, Vedanta Resources has been listed on the London Stock Exchange for ten years and has had a successful performance for its shareholders that participated in the IPO. Our total shareholder return has exceeded the stock index and the broader mining index over a ten-year period.
From an operational perspective, Vedanta Resources has a clear ambition to be seen as a global mining company. We have been in Zambia for a good part of nine years and have invested in significant operations in South Africa, Namibia and Liberia.
Vedanta Resources acquired the Konkola Copper Mine (KCM) in Zambia almost a decade ago, but the mine has continued to underperform. What is Vedanta’s strategy to increase production and profitability?
TA: We acquired the KCM nine years ago. KCM had been one of the largest copper mines in the Zambian Copper belt for over 80 years and had been run on and off by the state mining company, ZCCM Investments Holdings Plc and Anglo American. When we acquired it, there were only another 3 to 8 more years of life at the Nchanga mine, and our investments have added another 10 years of life to it. At the same time we elected to go ahead with plans to exploit the deeper version of the KCM, what is now referred to as the Konkola Deep Mining Project (KDMP). These plans had been on the drawing board for over 20 years, but nothing had been executed. Vedanta Resources had the courage and foresight to develop Konkola Deep at a time when copper was out of fashion.
Two and a half billion dollars later, we have a new modern shaft facility, a new smelter, 3 new concentrators, a tailings leach plant and new underground facilities that will serve us for many years to come. With the investments that we have made there is a potential to extend the mine life to beyond 50 years. We face some technical challenges at present that have delayed the ramp-up of production, but our commitment to KCM and Zambia is undiminished. Blessed with rich water and human resources, Zambia should be a breadbasket for growth. We in the mining industry are able to develop one part of the economy to help the leaders in Zambia create a vision for the other parts of the economy.
Vedanta Resources has world-class zinc operations in India. What was your rational for the acquisition of Anglo American’s zinc portfolio, which included the Skorpion mine in Namibia and the Black Mountain mine in South Africa?
TA: Vedanta Resources already has world-leading zinc operations with its Hindustan Zinc asset in India. We like zinc as a business and we saw an opportunity to bring our expertise to bear in Africa.
Since acquiring the Skorpion mine in Namibia we have been successful at adding additional resources to the pit and identifying additional resources in the region. In the next few years, we hope to upgrade the refinery, which is currently only designed to handle copper oxide ores, so that it can handle copper sulphide ores. This upgrade would involve the installation of a roster facility and would allow us to take zinc concentrates from developments both within the region around Skorpion and also from our operations just across the border in the Northern Cape in South Africa. It is our vision to make the Skorpion mine in southern Namibia and the Black Mountain mine part of a regional zinc complex, and all the zinc will be processed at the Skorpion mine. If we are successful, the business will have a much longer life than had been envisioned a few years ago. We are currently undertaking the feasibility work, and given that the mine only has a few years left, it is important that we move forward with this upgrade in the next year or two.
The development of your iron ore asset in Liberia is not possible without significant investment in infrastructure. Can you describe Vedanta’s planned infrastructure investments and how you have been working with the government to achieve these?
TA: I have been involved in iron ore in West Africa for a number of years and we certainly see Liberia as having world class potential to be a bigger iron ore exporter in the coming years. Liberia has had a long history of iron ore mining from 1970s to the early 1990s, when the mines now part of the western cluster business were running. It was a classic case study in natural reclamation. When the mines were shut down in the 1990s, as nature had done its job. It was hard to tell that there was a mining operation, as there were trees everywhere. Nonetheless, there are still resources there, and we are looking at reopening this mine. Liberia has gone through a difficult period of civil war and both the leaders and international and multilateral stakeholders are interested in seeing its economy develop.
Currently, we are working on infrastructure solutions that are making use of historic rights of way and in some cases roads that are still there. The original rail line that was there is no longer in existence so we had to find alternative rail facilities. We have to be sensitized to the extent that we look at rights of way and in some cases there had been encroachment by new communities and we are working closely with the Liberian government to find those infrastructure solutions. We hope to identify new greenfield rail and port solutions to diversify the overall economy and identify growth nodes for Liberia outside of the immediate Monrovia urban center.
As Vedanta looks to diversify its operations and become even more global, are you looking at further opportunities within the African continent?
TA: We are always scouting the world for new opportunities, and there is tremendous mineral potential in Africa. There is a strong will in Africa and in the global community for resource development in a sustainable way that matches global best practices. The key now is not just to find the technical and economic solutions but more realistically how to find those more holistic stakeholder solutions.
Vedanta Resources looks for a combination of mineral resource potential which Africa is blessed with, matched with the stability of governance that dictates if you can work in a way that is consistent with global and commercial best practice regimes, and is friendly for foreign direct investment.
This interview was part of the research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2015. To participate in this report, please contact Sharon Saylor at firstname.lastname@example.org.