Vedanta Mulls Expansion Plans at New South African Zinc Mine

(Bloomberg) -- Vedanta Ltd. is targeting zinc production of 1 million metric tons a year from its southern African operations as it expands output at its new Gamsberg mine in South Africa’s Northern Cape province, helping it remain one of the world’s biggest miners of the steel ingredient.

Vedanta Zinc International expects to receive board approval to proceed with phase 2 at Gamsberg in the next three to six months that will take production to 450,000 tons a year. The proposed expansion at the mine, which is ramping up to initial production of 250,000 tons, will cost $350 million to $400 million over the next eight years, Deshnee Naidoo, the chief executive officer of the company’s Africa base-metals unit, told reporters on a visit to the mine Thursday.

Gamsberg can raise annual output to 600,000 tons by 2031 with a potential underground mine, Naidoo said. That and supply from the nearby Black Mountain mine and the Skorpion Zinc operation in neighboring Namibia would take production to 1 million tons, she said.

“The future of this region sits in Black Mountain and Gamsberg,” Naidoo said. “We have over 300 million tons of zinc reserves or 22 million tons of metal in the ground. On the back of that we believe we can become a 1 million ton producer.”

Vedanta is also pressing ahead with feasibility studies for a smelter-refinery complex that will have an initial capacity of 250,000 tons a year. It will be South Africa’s first such facility since Exxaro Resources Ltd. shut down its unprofitable plant in 2011 after failing to find a buyer.

“We have started to place orders for all the study works and to appoint companies for the feasibility studies,” Naidoo said.

Vedanta is keen to get involved in South African President Cyril Ramaphosa’s drive to boost investments in the country, Naidoo said. Indian billionaire Anil Agarwal, who is Vedanta’s founder and major shareholder, has called Africa “tomorrow’s rising sun.”

“We believe we have something to put on the table and we have a government that’s willing,” Naidoo said. “Long-term, I am taking my chances on this country.”

To contact the reporter on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Jacqueline Mackenzie, Renee Bonorchis

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