The London-listed South African is to spend US$454 million dollars developing the Skorpion zinc mine and nearby refinery in Namibia, which will give it almost an 8% chunk of the 8 million tonne a year world zinc supply over the next five years if it also decides to go ahead with South Africa’s US$860 million Gamsberg project.
The group has historically focussed on diamonds and precious metals courtesy of South Africa’s rich mineral deposits, but by landing a place in the top echelon of base metal producers it hopes to cement its future in global mining.
Construction of Skorpion is to start immediately with the first output planned for the second quarter of 2003. It will produce 150,000 tonnes a year over a mine life of about 15 years.
At an anticipated cash cost of US20-30c per pound against a current zinc price of US53c/lb, it will also be one of the lowest cost zinc producers in the world.
The deposit contains reserves of 21.4Mt grading at 10.6% Zn and mineable as an open pit operation, but the composition of the ore has required Anglo to develop a new metallurgical technology.
Although there is a risk associated with the new technology, Anglo says pilot testing has proven successful.
It will be taking a similar risk with the Gamsberg deposit if it decides to go ahead. Gold Fields owned the ground for years but never developed the deposit because of its high manganese content.
The decision to proceed with Skorpion follows Anglo’s announcement last Wednesday that it has withdrawn from Tanzania’s Kabanga nickel mine, a project valued at US$250 million.
Executive director Bobby Danchin said at the time that the group had to prioritise the projects it has under consideration and retain the best prospects.
Anglo is also developing the Lisheen zinc project in Ireland and expanding its Hudson Bay lead-zinc mine and Black Mountain operations in South Africa. It has recently spent US$90 million for full control of South America’s Mantos Blancos copper mine and another US$141 million gaining a foothold in Western Australian base metals producer Anaconda Nickel.
