Central Africa is in the process of revitalisation and stronger integration re mining and economic activities. Apart from more political stability this will lead to better infrastructure and logistics and Anvil is poised to profit from this since the transport costs are an issue..
May be this article is of interest for the "broader picture":
The northern Namibian town of Tsumeb is the source of a remarkable resurgence that is taking place in the African copper industry.
When Gold Fields Namibia was placed in liquidation in 1998, many expected the operation to be broken up into a number of smaller operations.
Through the combined efforts of labour unions, management and government regulatory institutions, Ongopolo Mining and Processing successfully brought the mines and the smelter back into production on March 13, 2000.
The company has been revalued by independent consultants Resource Service Group in July 2004.
This gives a net asset value, in-cluding the new ‘Kombat Shaft’, of $201,2-million compared to a figure of $57-million for Ongopolo at its outset.
For replacement value, the figure is about N$3-billion, while, in contrast, the breakdown value is some N$600-million.
Rising copper prices are favouring the resurgence of Namibia’s Ongopolo Mining and Processing.
As world copper inventories have dropped from 700 000 t in June 2003 to just above 50 000 t in June 2004, so the price has risen from $0,80/lb to $1,43/lb.
However, the Namibian operation has managed to lower its production costs from $1,10/lb to $0,55/lb.
“Admittedly we were coming off a low base, but that is still a quantum drop,” says Ongopolo MD Andre Neethling.
Mining Weekly visited Neethling at his Tsumeb offices for an update on Ongopolo’s future.
Currently, Ongopolo (Ongopolo means ‘copper’ in Oshiwambo) has an exciting future, with a planned copper refinery and a copper wire and rod factory on the agenda.
Cometh the man . . . Neethling has had a long association with Namibian mining, having worked for the former Tsumeb Corporation Limited (TCL) in the early 1980s, leaving to join Sasol for 11 years.
In 1995 he returned to take up a position as the manager of TCL’s Otjihase copper-mine near Windhoek.
In 1997, he was transferred to Tsumeb as the production manager and second-in-command of the entire operation.
When TCL, under the ownership of Gold Fields Namibia, was placed in liquidation in 1998, Neethling was appointed manager for the liquidators.
Neethling soon learned that if the employees did not organise and work on a revival plan, the operation would be broken up with a major loss of value – and 2 000 jobs.
In March 2000, some former management members and key union leaders acquired the shares of TCL through a scheme of compromise and arrangement.
“From there on we had a plan to revive the operation,” says Neethling, producing a well-thumbed and annotated volume from a cupboard in his office. The revival plan was used as a bible for bringing the Namibian operation back to profitability.
A list contained in the document contains the measures needed to bring the operation back to profitability. For example, costs were brought under control while hostels were demolished or sold to private contractors.
Equipment has been standardised, and, in the workforce, discrimination has been rooted out.
The task that lay before Ongopolo was to get production and cash flow going again while reducing costs to the lowest levels possible.
The cornerstone of the revival plan was based on a set salary package with none of the perks, such as company cars, company houses, free electricity and even firewood.
TCL had, for example, employed a full-time pilot and operated two aircraft.
“Those overheads are now history,” says Neethling, “however, by making our people more self-reliant, this stimulated the local economy as, for example, there was now a need for local transport."
The workers had the option to buy their houses at very reasonable prices; most have seen the value of their properties quadruple at least.
Employees are required to prove that they are members of an acceptable medical aid and pension or provident fund, but beyond that, that portion of their salary package is theirs to dispense with as he or she sees fit, explains Neethling.
In addition, there are equal structures throughout the company regarding those historically-disadvantaged, women and handicapped people.
In the early days of Ongopolo, there was much suspicion and apprehension. However, those same people are now very pleased with the way things have turned out.
The ownership today is 100% Namibian, with 30,1% of Ongopolo’s equity belonging to the workers through two trusts, of which they are beneficiaries. This has stimulated a strong sense of ownership among the workers of Ongopolo.
A ‘very sound’ relationship has been built up with the unions, who form part of the tripartite concept that is built in to the business, namely cooperation between the Namibian government which acts as regulator, while the union acts for collective bargaining.
Finally, management runs the business from day to day and also creates the future vision for the operation.
A major Central African economic driver Fortunately for Namibian mines, the regulatory framework in Namibia is supportive of mining ventures.
If one looks at the figures for Ongopolo, the value of the company has grown by 200% in the last two years.
“This is an excellent track record which will stand us in good stead when it comes time to list,” enthuses Neethling.
The company had a listing through Gold Fields Namibia, and Ongopolo is looking to list again.
“This will have to be at the right time. Our priority for this facility is to increase our captive production,” continues Neethling.
“Our second drive is to become a part of Central Africa – Zambia and the DRC,” he adds.
In Zambia, Ongopolo has been the initiator of the ‘Lubumbashi Ndola Walvis Bay Copper Forum’, which has been established between Zambia, Namibia, and the DRC.
The initiative is aimed at supporting and growing the natural trading route that exists between these three countries, through the trans-Caprivi highway.
This makes sense for Ongopolo, as the mine has been toll-treating concentrates from the DRC for years.
One of the supplier mines is Anvil’s Dikulushi mine in the DRC, where Ongopolo was instrumental in assisting with the mine’s early cash flow.
One of the aspects being looked at in the Copper Forum is the examin-ation of cooperation opportunities. This cooperation is being promoted through the active involvement of the Heads of State of Namibia and Zambia with President Joseph Kabila joining the initiative in due course.
The Copper Forum includes representatives of the three chambers of mines of the respective countries. Other representatives are Dr Moses Banda, economic adviser to Zambian President Levy Mwanawasa, with Neethling and Veston Malango representing Ongopolo.
The DRC also has representatives from Gecamines and the Ministry of Mines.
Meetings are held once a quarter.
The economic and political circumstances in Central Africa are undergoing changes which will be conducive to increased business activity.
In the DRC, efforts are being made in combating corruption and similarly, good progress has been made in eliminating corruption in Zambia, explains Neethling.
In terms of infrastructure, the DRC/Walvis Bay trading route will be enhanced by the new road bridge which has been built over the Zambezi river.
Walvis Bay port has reportedly been classed as the number-one port in Africa for two years in a row. The harbour has been deepened to take larger vessels and this is an effective port for the landlocked Central African countries.
The other development is the trans-Kalahari highway that goes through Botswana, which has seen an increase in two-way traffic from Walvis Bay to South Africa.
At the moment the four Southern African Development Community-based smelters are maintaining com-munications for the first time in many years.
Ways of sharing capacity between the smelters at Palabora, Tsumeb, Mufulira and Nkana are being investigated.
A longer-term aim at Ongopolo is to double the capacity of the current smelting operation by bringing the mothballed second furnace back on line to boost production from 30 000 t/y to 60 000 t/y.
To feed its smelter, Ongopolo needs to acquire a world-class base-metal orebody, and here the Namibian miner is exploring in both Zambia and the DRC.
The upgraded smelter would be equipped with an anode-casting wheel and from there on it would be possible to supply the next major step for Ongopolo, which will be a local refinery.
Much of this will depend on the work that is under way at Tschudi mine at present.
>From there on there will be a supply of copper cathode which will be railed to Walvis Bay where the third major step forward will be a copper rod and cable factory.
Government is supporting this fully in no less a figure than President Hifikepunye Pohamba.
The need for the beneficiation of minerals on the African continent was highlighted at the African Mining Partnership launched at the Mining Indaba in Cape Town in January 2004.
Matchless – from millstone to milestone
At the outset, Ongopolo had only the mines of Kombat and Otjihase for its ore supply, and had to rely heavily on imported concentrates.
However, Ongopolo has the dual assets of very experienced staff and many mining opportunities which needed to be developed in a more planned, low-cost manner.
Mining Weekly paid a visit to the most recent addition to Ongopolo’s ore supply at the former Matchless mine, near Windhoek.
The new Matchless extension will benefit Ongopolo’s Otjihase mine, as its plant is capable of processing 110 000 t/m while the mine delivers about 50 000 t/m to 60 000 t/m.
However, the ore from Matchless will help take up this spare capacity.
The mine was put on care and maintenance in 1983 and finally stripped in 1989.
Matchless ore will come on stream in April this year and will be trucked to Otjihase.
Although Ongopolo is beginning a new project, it is not going to establish a fully-fledged mine.
It will be establishing the minimum of infrastructure at Matchless, though the 18 km gravel road from the Windhoek/Walvis Bay highway to the mine will be upgraded.
Fortunately, the drilling data for Matchless and the feasibility study were still available in the TCL records.
Reserves at present are about a million tons at 2,3% Cu. However, what applies to the orebodies at Tsumeb also applies at Matchless, in that, as mining progresses, more ore reserves can be proved.
“It is not advisable to go to the expense of proving up 10-million tons of reserves when one can only mine them in ten years’ time,” explains Neethling.
The Matchless orebody has the advantage that it is currently quite shallow (starts 40 m below surface), and through TCL records much is known about the orebody.
The body is open at depth, and the possibility exists that, once the current target, called the Western Extension, is mined out, mining can progress back towards the original shaft, mining the extensions of the orebody originally mined by TCL.
Numerous other ore possibilities
Soon after restarting the operation, Ongopolo developed the Tsumeb West Mine.
The operation is an 18 000 t/m to 20 000 t/m operation with a grade of 1,8% copper with 25 g/t silver.
At Tschudi, which is some 25 km north-west of Tsumeb, Ongopolo is busy evaluating the pyrometallurgical circuit while the free-digging potential of the pit is also being established.
At Kombat, a new 800-m-deep shaft is being completed from surface to access a major new orebody.
The life of mine from this new shaft is estimated at some 20 years.
At Otjihase, the next block of ore has been drilled out at a cost of N$21,5-million.
Currently, the mine has delivered copper at $0,55/lb for the last two years.
A long-dormant mine near Grootfontein that is being investi-gated is Berg Aukas mine, which has a reserve of some two-million tons of zinc and vanadium metals.
“All of these are sound strategic assets,” says Neethling.
Tsumeb smelter a valuable asset “There is a perception that the smelter is dilapidated, and that it is an environmental ‘black spot’,” explains Neethling.
However, a walk around the complex reveals that, though much of the infrastructure is old, consistent maintenance has preserved the value of the asset.
Today, it is an efficient producer of 25 000 t/y of copper, and this figure is set to increase to 30 000 t/y by 2007.
The smelter GM, Hans-George Nolte, has been instrumental in the clean-up of the smelting operation.
>From an environmental perspective, Ongopolo has cleared the smelter and its
surrounds to reduce environmental impacts.
Making the most of available opportunities To generate early cash returns, the slag retreatment plant, begun in the time of Gold Fields, with a capacity of 75 metal tons a month, was reopened.
A significant ‘win’ for Ongopolo is its zinc germanium project.
To one side of the smelter, there is about two-million tons of zinc-bearing dust, which also contains germanium gallium and iridium.
These are highly-sought-after rare metals, and there are many companies that want to get their hands on these metals.
With the stockpile containing some 800 t of germanium, Tsumeb holds the largest mined reserve of this metal in the world.
“It’s money for nothing,” says GM: Tsumeb operations Hans Louw.
With all the rehabilitation, the company has to balance available capital.
Maintenance has been outsourced to local companies.
This has seen the development of a number of smaller black empowerment companies, some of which have grown to such an extent that they are serving many other enterprises, some of them as far afield as Angola.
Essentially, these people were working for TCL prior to 1998, and this has provided many jobs in the local community.
Ongopolo’s success story has not been without plaudits.
In 2003, the smelter received its Five Star safety rating as well as its NOSA Five Star rating.
In addition, Ongopolo won an award for the quality of its affirmative action plan and, last year, it also was awarded the trophy for the best mining investment company from the Namibian government.
A further award was forthcoming last year from the Personnel Institute of Namibia for introducing all these new principles.
All of these factors are a far cry from four years ago.
“When it was decided to liquidate Gold Fields Namibia, the operation was in a mess,” says Neethling.
The attitude of the government to Tsumeb was very negative, and the reserves were depleted and the equipment in poor condition.
Now, with Tschudi coming on line and work being finalised on the zinc germanium project, the value of the company will shoot up, predicts Neethling.
“We managed to increase our net asset value fourfold in the last two years and, in the next two years, fully expect to double that value again,” he concludes. Published: 2005/02/14 Author: andrew lanham
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