Nikanor Invests $1.3 Billion into DRC’s Kolwezi Copper Giant

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Researched by Industrial Info Resources (Sugar Land, Texas). The long-term forecast for global economic growth show investment in strategic metals and resources a solid bet. When the metals market has been through a hot rise as in the past two years, any downward movement in demand and/or price is an opportunity for the pragmatists and doomsayers.

Some pundits have been saying that copper is the traditional bellweather metal and signs of a reversal wobble in price and demand in the second half of December could see a downward movement to a new lower plateau for most metals in 2007. The World Bureau of Metal Statistics reported that the global copper market was in a 306,000-ton surplus during the first ten months of 2006, although the WBMS does not report on any drawdowns that might have taken place from China’s reserves. The reserves have lowered apparent copper consumption. China’s copper and copper product imports fell 21% in the period of January to November to 1.86 million tons, as shown by a preliminary report from the national customs administration.

Taking the medium to long-term view, as any large project investor must do, Nikanor (NYSE:NKR ) (London, United Kingdom) announced in December that it will invest $1.3 billion to refurbish the KOV copper mine in the DRC (Democratic Republic of Congo) which holds the world’s highest grade copper resources at 5.09%. It also contains the richest copper-cobalt ore in the copperbelt that stretches into northern Zambia from the DRC.

Nikanor will build a new processing plant for the ore with a capacity of 265,000 tons per annum (tpa) and this capacity will be upgraded to 400,000 tpa. Nikanor has the rights to mine the open pit portion of the Kolwezi ore body with Katanga Mining (TSXKAT) (Toronto, Ontario) and First Quantum (NYSE:FM ) (Vancouver, British Columbia) owning the underground section of the project and the tailings dams, respectively.

The KOV project is scheduled to come onstream in 2009 and the project should reach full production in 2011 producing 250,000 tpa of copper and 25,000 tpa of cobalt over a 30-year mine life. Katanga Mining’s feasibility study at Kolwezi projects an average of 109,000 tpa of cooper and 5,680 tpa of cobalt over a 20-year mine life from its section. First Quantum is considering a facility at the tailings producing 105,000 tpa of copper and 20,000 tons of cobalt.

By November, Nikanor had mined 65,00 tons of ore from satellite operations in Kananga and Tilwezembe and planned capacity expansion to 2,500 tons per day at Kananga (6.9 million tons of resources) and 2,000 tons per day at Tilwezembe (5.7 million tons of resources).

Nikanor’s CEO, Jonathon Leslie said that one of the largest challenges facing the KOV restoration was the ‘colossal exercise’ of pumping out the 12 million cubic meters of water in the pits. He said that the company had signed an MoU (memorandum of understanding) with the electricity supplier SNEL for its first 100 megawatts and would need 200 megawatts when the project is in full operation.

Nikanor is in a joint venture with DRC’s state-owned Gecamines company to exploit copper and cobalt reserves in the region. Gecamines holds 25% in the joint venture and Nikanor the balance of 75%.

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