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Vedanta warns it may have to process ore outside South Africa

Reuters LONDON | Updated on November 26, 2019 Published on November 26, 2019

File Photo   -  Bloomberg

Zinc, mainly used for galvanising steel, has fallen nearly 7% this year. Vedanta's share price has fallen around 27% as it battled an array of issues.

Vedanta, one of South Africa's biggest international investors, will process its zinc ore elsewhere unless the country can fix its power problems, the CEO of Vedanta unit Vedanta Zinc International said.

South Africa has suffered rolling blackouts and the debts of state power company Eskom have sapped the country's economy.

The utility's problems also risk scuppering South Africa's goal of encouraging processing from mining operations to maximise revenues and jobs.

Deshnee Naidoo, the CEO of Vedanta Zinc International (VZI), which has operations in South Africa and Namibia, said she was concerned a solution might not be possible.

“If we can't make it work here, we will have to look at other geographies,” Naidoo said in an interview on the sidelines of the London Mines and Money conference. “My concern is about government's ability to deliver power.”

Just under a year ago, Naidoo said there was excess power capacity to help fuel a boom in the Northern Cape, which she described as one of the world's most exciting zinc districts.

The government is encouraging miners to build their own generation and supply any surplus to the South African grid.

But Naidoo said there was a problem with a lack of regulation for hybrid power, which she said was necessary because energy-intensive miners need fossil fuel to provide baseload and cannot rely solely on wind and solar.

VZI's power needs are mostly for processing ore from its Gamsberg mine, whose capacity it wants to double to 8 million tonnes per year.

One option could be to refine ore from Gamsberg in Namibia, but that would require the processor there to be adapted, Naidoo said.

In Namibia, Vedanta's Skorpion mine will close in 2021 and is on four months of extended maintenance from October following technical problems.

Naidoo said that when output resumed, it would be around 10,000 tonnes a month until September 2021 when the site will be put into extended care and maintenance as the mine will be exhausted.

Zinc, mainly used for galvanising steel, has fallen nearly 7 per cent this year. Vedanta's share price has fallen around 27% as it battled an array of issues.

In Zambia, it has been locked in a dispute with the government since May, when Lusaka appointed a liquidator to run Konkola Copper Mines -- 20 per cent owned by Zambia's state mining company ZCCM-IH and the rest by Vedanta.

Zambia accused KCM of breaching the terms of its licence, an accusation the company has denied.

Published on November 26, 2019
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