Jackson Sikamo, Country Manager, Chibuluma Mines

Chibuluma Mines was hit hard by the downturn and explains to GBR how it survived to reverse its fortunes.

Production began at Chibuluma South in 2006, with production levels at around 10,000 mt/y of copper in concentrates. How has the mine evolved since then, and what is the company’s vision for itself going forward under the relatively new leadership of the Jinchuan Group?

Maximum annual production was achieved in 2013 at 18,100 mt/y of copper in concentrates, representing 2% of Zambia’s total copper production for that year. In subsequent years, the drop in the copper price coincided with the depletion of our resources, implying difficult mining conditions. We are a fully mechanized mine and therefore very capital intensive, and we did not have sufficient cash flows to rejuvenate our machinery. We experienced significant losses in 2015, and needed to restructure the business. We could have put the mine under care and maintenance, but Jinchuan, through Metorex, took a long-term view and decided to expand its footprint in Zambia. They made the strategic decision to keep the mine going because continuing operations at the Chibuluma mines gave Jinchuan the opportunity to look for resources elsewhere in the country.

How did Chibuluma turn around a loss of US$30 million in 2015 to ensure that it could continue life as a company during the downturn?

We examined our cost profile to ensure we could live within the prevailing copper price, which meant reducing our production rate to 10,000 mt/y of copper and retrenching some of our labor force. In 2016, that loss reduced to US$3 million, and this year we are performing much more strongly than the previous years with current production ramping up to a rate of 12,000 mt/y. These measures we have taken ensure that our mining and processing efficiencies are optimal and the Jinchuan Group work culture has been instrumental in aligning and optimizing our cost profile to levels which are in sympathy with prevailing economic realities.  

As a mine coming to the end of its life, how is Chibuluma working to extend its life?

We have been looking at opportunities in the Chibuluma area and have been carrying out exploration activities in our Chibuluma South, Chibuluma West and Chibuluma Central tenements.  So far, a total of US$ 32 million has been spent on these activities since 2010. These activities resulted in better definition of the Chifupu deposit and the subsequent decision to develop it in 2012.  This deposit located 1.5 km from the Chibuluma South Orebody has extended the combined Chibuluma Mines life of mine from 2017 to 2022.  Copper Ore was accessed at Chifupu in May 2016 and stoping mine production operations started in January 2017.

Chibuluma Mines Plc is one of the very few companies, including the major players, that has a full-time exploration team. We are making concerted exploration efforts, and after continuous and close dialogue with the Ministry of Mines and Minerals Development, we obtained two additional large scale exploration tenements in the North-Western Province of Zambia and we are keen to commence greenfield exploration in that very prospective area to see how the future for Chibuluma can unfold.

Can you elaborate on the efficiencies that you have achieved to improve the cost profile at Chibuluma Mines?

Firstly, we have managed to ensure that we are running a safe operation by doing all we can to encourage our employees not to condone unsafe acts and not to condone unsafe conditions through well thought-out and coordinated interventions. In underground mining and mining in general, managing safety is key, because incidents and accidents are intolerable and when they do happen result in major disruptions to the employee’s wellbeing and the working environment. This focus on safety has had a positive impact on our productivity.

Secondly, because Chibuluma is highly mechanized, maintenance costs can also be quite a challenge. One of the components which go into a good maintenance management program are the skills to do the job.  We identified this as a challenge and we put our heads together with Jinchuan and brought in Chinese maintenance specialists  to augment our maintenance team, with a view to accelerate knowledge transfer and overall training and uplifting of maintenance standards.  This has helped us to control the mobile equipment costs, although the major challenge of equipment replacement is taking a little longer than we would like.

Thirdly we have developed a system of cost saving in which every cost line is comprehensively interrogated to ensure that all the possible savings are identified, responsibility apportioned, delivery target set, and a monitoring mechanism put in place.  This has yielded positive results so far and we shall continue on this path as we look to ensuring that we continue delivering as promised in our budgets.

In terms of ensuring optimal recovery rates, what have you done to improve the efficiency of your processing plant?

On the processing plant we have made a lot of progress, one area being in the grinding. In 2009, our flotation copper recovery was 94.0%. Significant work done in the optimization of both the grinding and flotation circuits has seen this recovery reach levels of 96.8% currently, whilst maintaining high concentrate grades of > 38.0% Copper.  This has been in spite of a reducing copper head grade.  A major contributor to this has been very close collaboration with the local mill ball supplier and the representatives of the flotation reagent suppliers in addition to the vigilance of our technical team. The improvement in recovery has been crucial to our economics as this is what drives our revenue.

What final message would you send to the international investment community about the mining opportunities in Zambia?

The investment environment has gone through some serious challenges in the recent past, but we have reached a point where the dialogue between government and investors is continuous and much more positive. We now have a taxation regime that is not perfect, but is more acceptable for further investment. We are almost there in terms of a win-win fiscal policy. That being the case, Zambia has become a very attractive investment destination. The government has been very clear and categorical in saying that they are intending to maintain a predictable and stable taxation environment, which is important because mining is a long term business and requires this level of assurance.  The challenges of electrical power in terms of availability of adequate and good quality electrical power consistently at cost reflective tariffs is receiving significant attention and should go a long way in consolidating the mining investment climate in Zambia.

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