With copper and nickel prices near all-time highs and fears that the rapid growth of production of battery-powered cars would result in a severe nickel shortage, on Sunday First Quantum Minerals (FQVLF) announced that it would expand it Kansanshi copper mine in Zambia and begin work on the new open pit nickel Enterprise mine.
First Quantum is a member of my Millennial Investor Portfolio (for investors with more time than money) on my JubakAm.com subscription site. Since my initial pick on January 13, 2022 that position is down 15.22%. The stock closed down 4.74% today, May 9.
The decision by the company follows changes in policy in Zambia by the new government that allow the company to deduct mineral royalty payments from its taxes. In exchange the company has made commitments on local employment levels and support for renewable energy projects.
The S3 expansion of the Kansanshi copper mine is expected to average production of 250 thousand metic tons of copper a year. The cost of the expansion is put at $1.5 billion. First production from the expansion is expected in 2025. ($800 million of this cost was included in the company’s three-year guidance released on January 17, 2022.)
The Enterprise nickel sulphide deposit is located 12 kilometers northwest of the Sentinel copper mine. Proven and probable reserves at Enterprise total 34.7 million metric tons of ore at 0.99% nickel. The development timeline for Enterprise is expected to be approximately twelve months. At full production, the mine is expected to produce an average of 30,000 metric tons of high-grade nickel concentrate per year. The total capital expenditure associated with the Enterprise nickel project is expected to be approximately $100 million. Expected first nickel production of 5,000 to 10,000 metric tons in 2023 is included in the company’s three-year guidance.