Vedanta approves R7bn project to double up zinc from Gamsberg facilities in Northern Cape

Vedanta approves R7bn project to double up zinc from Gamsberg facilities in Northern Cape

VEDANTA has approved the R7bn doubling of production capacity at its Gamsberg zinc facilities in South Africa’s Northern Cape province which will see the company become the largest African miner of the metal with annual output of 500,000 tons.

“This project will double up current Gamsberg production and create thousands of jobs,” said Vedanta CEO, Anil Agarwal. “We have witnessed unprecedented socio-economic benefits with the success of the Gamsberg phase I,” he said.

An additional 1,500 to 2,000 jobs will be created during construction phase and some 800 to 1,000 permanent jobs will be created during operations. Gamsberg mine employs about 1,200 people currently. The project will form part of the Namakwa Special Economic Zone, which will contribute and grow secondary industries, the group said.

The mine will be increased to a productive capacity of eight million tons from its current four million tons a year. In addition to expanding the mine, another four million ton a year concentrator will be constructed producing 200,000 tons of zinc metal in concentrate.

This will take production from Vedanta Zinc International (VZI), Vedanta’s local zinc subsidiary, to annual production of zinc metal in concentrate to 500,000 tons. “This project … serves as the beginning of new business opportunities with some of the local businesses and a continuation of partnerships with other small companies in the province,” said Pushpender Singla, CFO and executive director of VZI in a statement.

Today’s investment decision on phase two of Gamsberg follows the approval in July by VZI of a R600m project to recover iron ore magnetite from tailings at the largely worked out Black Mountain Mine. Roughly one million tons of tailings woudl be treated creating 250 full time jobs and a total of 360 during construction.

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The approval of Gamsberg’s expansion and a construction of the concentrator implys VZI has overcome some of the rail infrastructure and electricity cost concerns that held back an investment decision previously. Prior to the Covid pandemic, former CEO of VZI Deshnee Naidoo warned that uncertainty on issues ranging from infrastructure development to fiscal stability would leave the second phase in limbo as it was too risky to undertake.

Commodity prices have surged almost across the board as supply deficits widen owing to increased demand for electric mobility metals and uncertainty regarding replacement of metal reserves by miners. At $4,408 per ton, the price of zinc has risen 60% year-on-year.

The approval of the project caps a good few weeks for VZI.

Last month, Zambia’s High Court dismissed an appeal by ZCCM-IH to stay an earlier court decision to move a dispute over Konkola Copper Mines to arbitration. This means VZI, which controls Konkola Copper, will not immediately see the company wrapped up as sought by ZCCM-IH, a government owned company.

In addition, the official who was running with the provisional liquidation of Konkola Copper had earlier resigned. These events come about nine months after the election of Hakainde Hichilema as president of Zambia, replacing Edgar Lungu. Hichilema promised a more investment friendly administration that his predecessor.

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