Techno-economic potential for mining Zambia’s low grade copper ore deposits: the case of Kakosa South deposit

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Kangwa, Samuel
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The University of Zambia
Mining is an important economic activity in many developed and developing countries and has the potential to shape and affect economies directly and indirectly. Zambia is regarded as a mining country because of the contribution of mining to its exports, domestic markets, employment, and opportunities for economic growth and diversification. Zambia produces 5 percent of the world‟s copper production and it has been generally increasing since 2000. The increased production has led to quick depletion of ore reserves. The depletion of copper ore reserves would seriously threaten economic growth and stability. The copper resources available to existing mines in Zambia are estimated at 2.8 billion tonnes of ore ranging between 0.6 and 4.0 percent copper. In addition, Zambia has potentially recoverable ores estimated at 1.6 billion tonnes ranging between 0.4 and 0.5% copper. In Zambia, economically recoverable copper deposits are those with grades more than 0.5% for surface mining and more than 1.5 percent for underground mining. In countries like Chile, Australia, and Canada, deposits at 0.4 percent and 1.0 percent are economically extracted by surface and underground mining respectively. Because copper mining industry is an important economic activity for Zambia, there is need to investigate possibilities of economically mining marginal copper ore reserves. The purpose of this research is therefore to investigate, analyse and determine Zambia‟s potential for mining low grade copper deposits. If economically mineable, the low-grade deposits will increase copper reserves from 2.8 billion to 4.4 billion tonnes. The additional resources would prolong mining for approximately 30 years. In order to determine techno-economic potential for mining Zambia‟s low grade copper deposits, the study had to review the existing data on low grade deposit through literature survey. The mineral resources classification and codes of reporting systems were evaluated and it was revealed that Zambia has not developed a code for the reporting of exploration results, mineral resources and mineral reserves. It is therefore recommended to employ modified United Nations Framework Classification (UNFC) to develop a Zambia‟s code. The study also analysed macro-environmental factors affecting Zambia‟s potential for mining low grade copper ore deposits. PESTLE and SWOT analysis were used to evaluate the external and internal macro environmental factors. A more accurate multi-criteria decision making model for PESTLE analysis was developed and applied. The results indicate that the level of the macro environment is moderately favorable to mining of low grade copper ore deposits at the current situation. If Zambia has to attract credible investors in the mining sector, the country has to improve its macro-environment level. This can be achieved by addressing the country‟s weaknesses identified in the SWOT analysis. Kakosa South low grade copper ore deposit was selected as a case study. Kakosa is located about 450km northwest of Lusaka, the capital city of Zambia. In Kakosa area, the footwall aquifer rocks comprising sandstone and conglomerates are thin and as such are not expected to represent vii major aquifers while mining. Copper mineralisation occurs in the Hangingwall Quartzite (HWQ) and Oreshale. The orebody generally dips at shallow angles of 250 to 350. Based on UNFC, this study classified the Kakosa South copper deposit as G1.2; F2.0 and E3.0 translating into measured resources with possibility of qualifying into probable mineral reserves. The classification of rock mass was based on RQD, Q-System and RMR. From the drill-hole raw data, geological resource and block models were developed and the resource estimation was determined. In order to recommend a suitable mining system, different approaches which have been developed by various researchers were reviewed. After the review, Technique for Order Preference to Ideal Solution (TOPSIS) was modified and Fuzzy TOPSIS model was developed. The FTOPSIS model was used to select the suitable mining methods for Kakosa South copper ore deposit. The results indicated the open pit mining method as the optimal method followed by sublevel stoping and cut and fill. Thereafter, the mining systems were designed, including open pit designing, determination of stripping sequence, and production scheduling. It was revealed that although Kakosa South deposit depth is suitable for open pit mining, its geometric shape allows high stripping ratio. It was therefore necessary to find a way of reducing the amount of waste to be stripped. Considering the overall stripping ratio for the final open pit which is appropriately 1:16, it is proposed to extract the deposit by both open pit and underground mining. Sublevel stoping was recommended for underground mining. Based on the recommended ore mining methods and the estimated mining parameters, an economic analysis was carried out using DCF Model. DCF model applies Net Present Value (NPV) and Internal Rate of Return (IRR) in the evaluation. The results showed a negative NPV of US$102.1m and a negative IRR of 9.93%, meaning that the Kakosa South mining project is not viable with the current macro-environment. Because of the negative NPV, it was necessary to consider logical options to create a level of flexibility in the decision making of whether to abandon or defer the Kakosa mining project. The ROV model was applied and taking into consideration modifying and macro-environmental factors, the NPV and IRR were recalculated and results showed a positive NPV of US$4,579 and a positive IRR of 12.08%. The results indicated that Kakosa South mining project can be viable. It is concluded therefore that if Zambia addreses its weaknesses and improves its PESTLE factors indeces, coupled with the projected high copper price, the macro-environment would be conducive resulting in positive gross option value and it would be an opportune time to invest and commence mining of low grade copper ore deposits. Zambia has therefore, the potential of economically mining Kakosa and other similar low grade copper deposits. Keywords: Mining, low copper grade, economic potential
PhD Thesis
Copper mining--Zambia , Mineral resources --Zambia