Anglo's zinc loss now Vedanta's sweet gain

Deshnee Naidoo

Photo by Duane Daws

Tom Albanese

Photo by Bloomberg

25th February 2015

By: Martin Creamer

Creamer Media Editor


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JOHANNESBURG ( – London-listed diversified mining company Vedanta Resources has found itself in a sweet spot as the owner of the zinc assets that Anglo American saw fit to sell off four years ago, when China seemed in perpetual oversupply mode and small operations abounded.

But China is no longer supplying as it did in the past and there have been anticipatory price improvements over the last eight months on the expectation that zinc supply is leaving the market.

The only other London Metal Exchange commodity that is approaching zinc’s current price firmness is aluminium, also because of market pessimism engulfing it for so long.

Meanwhile, the reserves of Anglo’s former zinc assets have been significantly extended under Vedanta's management, to a point where the India-rooted company will have full payback of its original investment even before the deal’s key Gamsberg asset comes into play.

Vedanta bought Anglo Zinc for $1 338-million in May 2010 and has been investing in underground and near-pit development since 2012.

The additional life it has given to the Black Mountain mine in South Africa’s Northern Cape and the Skorpion operations in Namibia has added significant value.

Even Anglo’s former zinc mine in Lisheen, Ireland, which was scheduled, when bought, to close in 2013, will now only close in October.

“Anything we get from Gamsberg will be a straight dividend,” Vedanta CEO Tom Albanese explained to Creamer Media’s Mining Weekly Online on the sidelines of the Mining Indaba.

Vedanta approved a $782-million three-year investment on the development of the Gamsberg–Skorpion integrated zinc project in November, with $630-million earmarked for developing a 250 000 t/y openpit zinc mine, concentrator plant and associated infrastructure at Gamsberg, the site of one of the world's largest zinc deposits, near Aggeneys, in the Northern Cape, 20 km from the Black Mountain mine.

The balance will be used on the development of an integrated 150 000 t/y roaster at the Skorpion Zinc refinery, in Namibia, to enable it to treat zinc sulphide deposits from the Gamsberg mine to produce high-grade zinc. This would also extend the life of the Skorpion Zinc operation, which had previously been expected to close down in 2015.

The Gamsberg–Skorpion integrated zinc project is central to Vedanta’s long-term aspirations for Southern Africa, with the output from Gamsberg, coupled with extending the life of the world-class refinery at Skorpion Zinc, in Namibia, expected to make the Southern African region one of the most important suppliers of refined zinc globally and a cornerstones of Vedanta's operations in Africa.

Prestripping and the cut development at Gamsberg – which will create 1 500 jobs during construction and 500 permanent jobs when in operation – is scheduled for the third quarter of this year and the vision is to grow eventual Gamsberg production to 450 000 t/y and beyond in three phases.

The first ore production is scheduled for 2018, with the Southern African region poised to become one of the world’s most important suppliers of refined zinc.

There is an opportunity of early ore access at the Gamsberg South pit, from which ore could be trucked to Black Mountain’s plant for processing, probably on a turnkey contractor basis.

The investment is taking place at a time when much of the supply that has been coming out of China for the last 20 years is now either being exhausted or running into environmental permitting problems because of tighter environmental protection laws.

Also, with large mines like Century in Australia closing and new greenfield projects off the charts, the incentive price for the next generation of new zinc projects is likely to be in the high $2 700/t to $3 000/t range.

No longer chased by a major with an infinite balance sheet, Vedanta’s plan is to start Gamsberg at a rate of four-million tons a year on a resource base of 180-million tons, giving itself wide optionality to scale up as market conditions dictate and as technology and Vedanta’s own Southern African footprint improve.

Zinc International CEO Deshnee Naidoo, who formed part of the dual interview with Creamer Media’s Mining Weekly Online, reported that early pre-start orders for the promising Gamsberg project would be placed in the next month or two. Zinc International is part of Sesa Sterlite, a Vedanta subsidiary.

Currently in the detailed engineering phase following its November approval, Gamsberg’s two different ore types will be dealt with separately. The low- to mid-range manganese ore will be placed on the seaborne market and the high-manganese concentrate will be sent 600 km by road to Skorpion, first for roasting, to remove the manganese, and then refining.

Skorpion treats oxides ore using solvent extraction and electrowinning. The refined product is a 99.99% zinc ingot, some coming back into South Africa and the rest being shipped.


Recruitment for the owner’s team at Gamsberg is currently under way at an opportune time, as the Northern Cape is replete with skills from Kumba Iron Ore’s just-completed Kolomela iron-ore project, which can be augmented by skills from within the Vedanta group itself.

Much thought is also being given to the recruitment strategy for the operational team, with the development and training of local people planned.

Naidoo has a personal vision of developing the first all-female crew for Gamsberg.

“It'll be a mechanised operation, it’s on surface and there’s absolutely no reason why we can’t look for an all-female crew from the Northern Cape,” she said.

Currently in the second quartile of the cost curve, Gamsberg has Vedanta’s first-decile Hindustan zinc business in India as a benchmark, with Naidoo reporting to Hindustan Zinc CEO Akhilesh Joshi.

As a combination, Hindustan Zinc and Zinc International are the second largest integrated zinc producer and the largest zinc miner in the world, both with opencast and underground operations.


Black Mountain, a 1 387-employee operation 113 km north-east of Springbok, consists of the Deeps mine, Swartberg mine and the Gamsberg project.

The Deeps mine, an underground operation with a production rate of 1.7-million tons a year, mines a polymetallic orebody producing zinc, lead, copper and silver concentrates and has been in production for more than 30 years.

Edited by Creamer Media Reporter



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