Nkana SmelterCo (KCM Vedanta) - Zambian Copperbelt (sitios de interés)
Descripción del sitio
SMELTER DOWN (FEB 2009)
January 30, 2010 - Goverment pressing KCM to consider opening the Nkana smelter
February 19, 2009
Zambia's Konkola shuts Nkana smelter
NKANA OPERATIONS
KCM Nkana is situated in Kitwe, Zambia.
The Nkana Smelter is the largest primary copper production plant in Zambia. The plant treats concentrates mainly from Nkana, Nchanga and Konkola mines which are wholly owned by KCM to produce up to 150000t of new copper.
Nkana Smelter
The smelter produces high grade anodes, which are electrolytically refined. Sulphur dioxide gas produced by the Converters is converted into sulphuric acid which is then used at the Tailings Leach Plant, Nchanga for recovering oxide copper. The smelter also produces discard slag from the reverbs that is rich in cobalt which is stored for future reclamation.
Nkana Refinery
The Nkana Copper Refinery produces electrolytically refined copper in the form of cathodes. The copper meets the LME premium quality grade. The tankhouse has a capacity of about 180000t of finished copper per annum.
Nkana Acid Plants
There are two single contact sulphuric acid plants at Smelterco, namely No. 3 and No.4 plants. No.3, the largest is still operational. The plant has a design capacity of 1050 t per day acid.
KCM Nkana is situated in Kitwe, Zambia.
The Nkana Smelter is the largest primary copper production plant in Zambia. The plant treats concentrates mainly from Nkana, Nchanga and Konkola mines which are wholly owned by KCM to produce up to 150000t of new copper.
Nkana Smelter
The smelter produces high grade anodes, which are electrolytically refined. Sulphur dioxide gas produced by the Converters is converted into sulphuric acid which is then used at the Tailings Leach Plant, Nchanga for recovering oxide copper. The smelter also produces discard slag from the reverbs that is rich in cobalt which is stored for future reclamation.
Nkana Refinery
The Nkana Copper Refinery produces electrolytically refined copper in the form of cathodes. The copper meets the LME premium quality grade. The tankhouse has a capacity of about 180000t of finished copper per annum.
Nkana Acid Plants
There are two single contact sulphuric acid plants at Smelterco, namely No. 3 and No.4 plants. No.3, the largest is still operational. The plant has a design capacity of 1050 t per day acid.
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KCM VALUATION - ROTSCHILD
4.4 Third Party Smelting and Refining
Toll treatment of concentrate by smelters is common throughout the world, but had nottraditionally been undertaken in the Zambian Copper Belt as mines tended to be developed with their own associated processing capacity. At the Relevant Date this was changing, and it appeared likely that toll treatment would become more commonplace.
IMCL states that the existing smelter at Nkana was uncompetitive in this market due to its low recoveries (modern smelters typically achieve 97% recoveries but the Nkana smelter only averaged 92% recovery). However, IMCL s assumption is that the smelter would be the subject of a significant upgrade pushing the recovery up to around 95%. Although immediately post the upgrade Nkana would have limited spare capacity, post closure of Nchanga in 2016 it would have the ability to take approximately 30,000 tonnes per annum and it would be commercially reasonable for KCM to seek to toll process third party concentrate.
However, at the Relevant Date it would have been difficult for a prospective buyer to establish with any degree of certainty the viability of toll processing and the benefits that might accrue more than ten years hence:
- Mopani had already committed to the expansion and upgrading of Mufulira and CNNC was also considering a new smelter. There was therefore the prospect of significant competition for concentrates in the Copper Belt and, even post the upgrade, Nkana s cost structure would be high and it would be unlikely to attract material until the other smelters were at capacity; and
- the level of supply was unclear given the uncertain remaining lives of many mines, the absence of final decisions to bring new mines on stream and the uncertainty at the time regarding whether projects in the DRC would proceed and, if so, whether they would produce concentrates or would instead adopt a hydrometallurgical approach.
The availability of material for Nkana was therefore uncertain.
In view of the above, although a buyer might conceivably have identified this as a future source of upside, in our judgment it is unlikely to have resulted in it being willing to offer materially more for KCM.
4.5 New Smelter
Although KCM was clearly considering an upgrade to Nkana, there is no evidence that, prior to the Relevant Date, the Company was considering a completely new smelter (albeit this alternative approach was decided upon shortly thereafter). We nevertheless believe that a buyer of KCM at the Relevant Date might have factored this alternative into its evaluation given:
- the economics of the upgrade are adversely affected by the limited scope for cutting costs because the smelter would still rely on many labour intensive processes and outdated pieces of equipment needing significant ongoing maintenance; and
- the continued costs of transporting the concentrates to Kitwe.
In its report IMCL has estimated the capital costs of a brand new smelter and determined a net present value benefit versus the upgrade of approximately US$50m at a 10% real discount rate.In the context of a (hypothetical) sale of KCM at the Relevant Date, we are sure any buyer
would have spent considerable time and effort thinking through the smelter options, given that the status quo was operationally unsatisfactory and KCM s own thinking had still not fully evolved. With the passage of time and subsequent developments it is difficult for us to judge what conclusion buyers might have reached and hence to what extent they might have identified and reflected all or part of the benefit of a new smelter (or indeed potentially a more attractive upgrading option) into the offer. We conclude, however, that the approach in the IMCL Reference Case is probably conservative and that a buyer may have factored into its analysis smelting options that increased the value.