Name of the Project
Gamsberg-Skorpion integrated zinc project.

Location
South Africa and Namibia.

Client
Zinc International is a grouping of Vedanta Limited’s zinc assets in southern Africa and Ireland. The group comprises Black Mountain Mining in South Africa, Skorpion Zinc in Nambia, and Lisheen in Ireland.

Project Description
Gamsberg is one of the world’s largest undeveloped zinc deposits.

The project has an ore reserve of 53.18-million tonnes at 6.63% zinc and 0.51% of lead at Gamsberg North.  In addition to the reserves, Gamsberg North has a resource of 130-million tonnes at 6.1% zinc and 0.52% lead (reserve and resource cutoff at 3% zinc). In addition, Gamsberg East has a defined inferred resource of 32.2-million tonnes at 9.83% zinc and 0.52% lead (at a 7% zinc cutoff). Both orebodies are still open at depth.

The project involves the phased development, construction and commissioning of a four-million-tonne-a-year openpit zinc mine, concentrator and associated infrastructure at Gamsberg, in South Africa’s Northern Cape province.

In addition, the project includes the conversion of the Skorpion Zinc Refinery, in Namibia, to process zinc sulphide material from Gamsberg. The expansion will also extend the life of the Skorpion Zinc operation.

The following associated infrastructure will be put in place, along with the mine and concentrator:

• a tailings dam, a waste rock dump and stockpiles;
• offices and workshops;
• a power transmission line from the Aggeneys substation to Gamsberg;
• a water pipeline; and
• an access road from the N14 to Gamsberg.

The first phase of the Gamsberg mine is expected to have a 13-year mine life.

Jobs to be Created
The company’s Black Mountain mine employs 1 500 people, who live in the mining town of Aggeneys, 113 km north-east of Springbok.

The Gamsberg project will employ another 850 to 900 people when operational and 1 200 people are expected to be employed during first-phase construction.

Net Present Value/Internal Rate of Return
Not stated.

Value
Phase 1 of the project was initially estimated at $600-million.

Vedanta has made significant progress in reducing Gamsberg capital expenditure over the life of the project, reducing capital expenditure by $200-million to $400-million primarily through re-engineering and renegotiating contracts, taking advantage of the current commodity environment.

Duration
The first blast at the mine project took place in July 2015. First production in scheduled for 2018.

Latest Developments
Zinc International is planning to use revenue generated during the Gamsberg project’s first phase to help fund Phase 2, which is likely to include a new 300 MW to 350 MW zinc refinery at a cost of not less than $500-million to $600-million.

While project debt was difficult to come by during the same period last year, a significant difference is being noticed currently for zinc in particular, and CEO Deshnee Naidoo is confident that local banks should be able to provide the company with the debt quantum needed.

“We’re setting ourselves up for success because we can use the revenue that we generate from Phase 1 to build what will be a very capital-intensive Phase 2,” Naidoo has told Mining Weekly Online.

To expand the opencast mine to ten-million tonnes a year, as well as more than double the plant capacity, will require another $300-million to $350-million. The phased approach enables the company to derisk such an investment over a period of time.

At current zinc prices, which are considerably higher than the project’s hurdle rate, the first phase should pay for itself in less than three years.

The energy solution for the refinery will take into account the independent power projects currently under way in the Northern Cape.

To power a refinery on only coal-fired electricity in the Northern Cape is currently seen as unlikely. The location of the refinery will all come down to proximity to port and electricity wheeling; logistically it makes sense to use renewables.

The manganese content of Gamsberg’s zinc ore, formerly seen as an impediment to the project’s go-ahead, has been resolved by removing the metal in the concentrate's higher manganese fraction at the company’s modified Skorpion operation, in neighbouring Namibia.

The other game-changer has been Zinc International’s modular approach to the project, which is a deviation from former owner Anglo Zinc’s megavision of a ten-million-tonne run-of-mine, 450 000 t plant and refinery from the outset.

The Vedanta subsidiary is also opting for less-capital-intensive contract mining rather than the originally planned owner mining, with additional capital savings being achieved by re-engineering, redesigning and negotiating lower-priced contracts.

Once Phase 1 is developed, manganese challenges are fully understood and cash flow is generated, full consideration will be given into investing in a refinery that will deliver into South Africa’s beneficiation strategy.

So far, more than 11-million tonnes of overburden have been moved by 300-plus contract personnel on site.

Engineering solutions provider ELB’s Engineering Services subsidiary has been appointed to provide engineering, procurement and construction (EPC) services at the zinc project.

The company will oversee the construction of the process, power and water plants at the project.

Gamsberg is a greenfield zinc mine, comprising an opencast mine, ore beneficiation plant and

More than 80% of the $400-million will be spent in South Africa; all the equipment will be local and a local mining contractor will be appointed.

From the outset, Naidoo has been determined to do right by dealings with employees, communities, suppliers, local government and national government.

To date, the company has met its commitment of building the Gamsberg zinc mine within five years of buying Anglo Zinc for $1.34-billion in 2010.

Naidoo is confident that the price fundamentals will be there over the next three to four years, when key decisions need to be made on the next growth steps.

Key Contracts and Suppliers
Rand Merchant Bank (debt advisory), Le Roux Mining & Commodities (prestripping) and BME (explosives and drilling).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Zinc International Manager PR and Corporate Affairs Christo Witbooi, tel + +27 54 983 9225 or email CWitbooi@blackmountain.co.za.