First Quantum Minerals (TSE: FM) (OTCMKTS: FQVLF) has launched a USD$1.25 billion expansion at its Kansanshi copper mine in Zambia, marking the largest copper investment in the country in nearly ten years.
The S3 project, initially proposed in 2012, adds a new processing plant that nearly doubles Kansanshi’s ore-milling capacity, boosts smelter throughput by about 25 per cent, and develops a new open pit. Commissioning begins Tuesday, three years after board approval, according to Bloomberg.
Kansanshi, once Africa’s largest copper mine, is set to produce an average 250,000 tonnes of copper annually through 2044. This marks a significant increase from 171,000 tonnes expected in 2024. The expansion also strengthens Zambia’s mining sector as President Hakainde Hichilema aims to more than triple national copper output by the early 2030s.
For First Quantum, the project provides a strategic lifeline after the 2023 closure of the USD$10 billion Cobre Panamá mine. The shutdown, mandated by Panama’s Supreme Court, cost the company approximately USD$20 million per month in care and maintenance.
Meanwhile, Zambia now accounts for over 90 per cent of First Quantum’s production through Kansanshi and its nearby Sentinel mine. Together, the two mines contribute more than half of the country’s total copper output, highlighting Zambia’s dependence on copper for over 70 per cent of export earnings.
First Quantum has also bolstered its finances to support growth. The company raised USD$714 million through an upsized bond offering, pricing senior notes due 2029 at 8.625 per cent. This exceeds the initial target of USD$650 million and will fund debt repayment and general corporate purposes.
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First Quantum remains flexible with regulatory challenges
In addition, a USD$1 billion gold stream deal with Royal Gold (NASDAQ: RGLD) monetizes Kansanshi’s by-product gold output, while allowing First Quantum to maintain its copper focus. The company emphasizes financial flexibility as it navigates political and regulatory challenges, particularly in Panama.
Despite global headwinds, First Quantum’s Zambian operations remain profitable. Kansanshi produced 171,000 tonnes of copper and 105,103 ounces of gold in 2024, marking its highest gold output since 2022. Sentinel added another 231,000 tonnes of copper, bringing consolidated production to 431,000 tonnes. In the fourth quarter alone, Kansanshi delivered 48,000 tonnes of copper and nearly 30,000 ounces of gold, reinforcing its role as the cornerstone of the company’s African portfolio.
The expansion also positions First Quantum competitively as rivals increase investment in Zambia. Barrick Mining Corp (TSE: ABX) (NYSE: B) committed USD$2 billion to expand its Lumwana copper mine in the North-Western Province. Furthermore, the move signals confidence in Zambia’s copper-rich future.
By commissioning the S3 project, First Quantum secures growth amid uncertainty in Panama while strengthening its long-term African operations. Additionally, the expansion supports Zambia’s ambitions to boost copper production, maintain export earnings, and attract further investment.
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joseph@mugglehead.com
