John Gladston, Government Affairs Manager, First Quantum Minerals Ltd.

MACIG Connect Series

First Quantum derives the majority of its revenues from its Sentinel mine in Zambia which it is bringing to nameplate capacity.

Can you highlight the significance of First Quantum’s projects in Zambia to the company’s global strategy?

Zambia clearly remains strategically important to First Quantum. As a group we have diversified into Central and South America, but in the medium-term, Zambia will remain an important partner for us; not only because the majority of the company’s revenue stems from Zambia but also because the heritage of the company is deeply seated in this jurisdiction. Our immediate focus in Zambia is on Sentinel mine and its ramp-up to its nameplate capacity. Eventually, this will see it producing between 280,000 and 300,000 tonnes of copper per annum (mt/y). We will also continue to advance the towns and multi-facility economic zones associated with our Zambian mines in order to promote diversification and the development of the communities in which we operate.

Are there any particular infrastructure projects that you see as pivotal in bringing the Zambian mining sector forward?

Power supply certainly remains an important factor in Zambia and we pay great attention to developments in this sector. Maamba Collieries’ coal-fired power plant’s coming online has been helpful, and while previously there have been issues with the management of the Kariba Dam, going forward, and notwithstanding atypical rainfalls, we remain confident that there will be adequate power available for large-scale mining operations in Zambia; this particularly as Zambia’s power sector continues to develop and diversify not just in the area of renewable energy such as solar, but also with new hydro power projects being developed.

First Quantum’s Enterprise project has been designed to produce an average of 38,000 mt/y of nickel concentrate. What is the strategy for taking Enterprise into production?

Enterprise is an extraordinary nickel orebody adjacent to the Sentinel copper ore body in the Kalumbila district in the North-Western province. For the moment, we have chosen not to bring the Enterprise mine into operation due to the current price of nickel; but we are poised to respond once the price recovers. Enterprise shares commonalities with the Sentinel process plant and, under the right conditions, it will not take much for us to commission Enterprise relatively quickly.

Can you highlight the advantages, as well as the challenges, of operating in an established mining jurisdiction such as Zambia?

Zambia is a good place to do business. The population has mining in its blood and Zambians understand the complexities involved in mining. They have a willingness to adopt new strategies, techniques, and technologies. Moreover, Zambian’s are very proud of their mining heritage; understandably Zambians wants to realize the wealth locked-up in their mineral recourses. We feel there remains some work to do with regard to regulatory processes in the mining and energy sectors if Zambia is to remain a truly competitive jurisdiction and so attract future additional foreign investment.  However, the Government has shown a great willingness to consult and maintains an open and constant dialogue with the industry; in particular concerning the mining tax code, reform of the state power utility ZESCO and liberalization of land legislation.  But in broad terms Zambia remains a good place to do business.

What trends are driving shareholder interest in corporate social responsibility (CSR) initiatives?

Obtaining and maintaining our social license to operate is very important to First Quantum. We place great emphasis on our two foundations which coordinate our corporate social responsibility activities in Zambia. This is not just an exercise to satisfy investors, but more because it is the right thing to do. Nonetheless, ethical investing has become as important to large investment funds just as much as it is to private investors.  Many major pension funds have significant holdings in extractives and they need to know that the companies in which they are invested pay their taxes whilst acting ethically and sustainably.  The Extractive Industry Transparency Initiative (EITI) has been helpful in promoting just this. The government collects a significant amount of data from our mines every month and we are quite happy for them to do so in order to demonstrate unequivocally the amount of money being paid in tax.

How does First Quantum evaluate the political situation in Zambia and what does it mean for international investors?

Zambia has shown a great ability to exercise democracy through elections. First Quantum places great value on the democratic rights of the citizens of the jurisdictions in which it operates, as does the international investor community.  This is as important as the social license to operate and something which influences decision-making processes.  Whilst all nations experience political challenges, we remain confident that democracy remains important to Zambians.  This was underlined by Zambia’s recent overwhelming decision to remain a signatory to the International Criminal Court following a wide domestic consultation.

Where would you like to see First Quantum’s projects in Zambia in two to three years?  

Zambia wants to return to being Africa’s largest copper producer, reclaiming that title from DRC. With the Sentinel mine getting closer to nameplate capacity every month, that objective is entirely realistic. First Quantum is constantly evaluating its operations to increase efficiency and to take full advantage of emerging technologies; all of which will serve to secure production and reduce costs.  Certainly, we would also like to see our foundations continue with their work in the communities in which we work; to develop the towns and promote local business enterprises with a constant eye on these communities becoming self-sustaining in the fullness of time.  We would also like see the conservation farming continue to flourish, both for arable and potentially livestock farming too – hand-in-hand with our wildlife conservation, health and education initiatives.  We are very proud to be able to play a role in the development of these rural communities.

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