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Vedanta arm to spend $782 mn on developing African zinc mines

14 November 2014

The board of Sesa Sterlite, a subsidiary of London-listed but India-focused Vedanta Resources Plc, has approved an investment of $782 million in Southern Africa over three years for zinc mining.

The investment is primarily intended to develop large tracts of undeveloped deposits of metal in the region, and also to partially offset dipping production from its zinc mines in Ireland.

As part of this investment, it will develop an open-pit zinc mine in Gamsberg, South Africa, and also take up the conversion of the Skorpion Zinc Refinery in neighbouring Namibia.

The bulk of the investment, approximately $630 million, will go to developing the open-pit zinc mine, concentrator plant and associated infrastructure at Gamsberg, one of world's largest undeveloped zinc deposits.

The rest investment will be used to convert the refinery at the Skorpion Mine in Rosh Pinah, Namibia. This will enable it to refine zinc concentrates from the Gamsberg mine into special high-grade zinc metal.

The Gamsberg project, located near Aggeneys in South Africa's Northern Cape Province, is expected to generate 1,500 jobs during construction stage, and result in approximately 500 permanent jobs.

The Gamsberg project will be operated under Black Mountain Mining (BMM), which is 74-per cent owned by Sesa Sterlite Ltd. The remaining 26 per cent stake in BMM is held by Exxaro Resources Ltd, a diversified resources company listed on the Johannesburg Stock Exchange.

The first phase of the Gamsberg open-pit mine is expected to have a total lifespan of approximately 13 years, with the first ore likely to be produced in 2017/18.

The Gamsberg Zinc Project involves the development, construction and commissioning of a 4 million-tonne ROM open-pit zinc mine, concentrator and associated infrastructure at Gamsberg, 20km from the town of Aggeneys.

The company expects to commence construction of the new mine during the first quarter of 2015.

The new Gamsberg mine, at Aggeneys in the Northern Cape, will cost $630 million and produce 250,000 tonnes a year of zinc in concentrate, said Kishore Kumar, the chief executive of Vedanta's Africa metals business.

Vedanta will truck 150,000 tonnes of zinc-and manganese-rich concentrate to its Skorpion zinc refinery in Namibia to process into metal.

The remaining 100,000 tonnes of concentrate will be sold on the open market. Vedanta will spend $152 million on converting the Skorpion refinery to treat the sulphide concentrate coming from Gamsberg, about 360 km away, Kumar said.

The Skorpion mine is coming to an end in 2017, ceasing supply of oxide material to the refinery.

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