Zambia copper mines suspend output after nationwide power blackout

A nationwide power blackout on Friday forced copper mines in Zambia, Africa’s top producer of the metal, to halt output, but the country’s energy minister said electricity supply could resume later in the day.

A fault at a hydro power station triggered the first national blackout to engulf the southern African nation since June 2009, which cost copper producers millions of dollars in lost revenue and dented their copper output. [ID:nLG31563]

Power blackouts are frequent in Zambia, and have been a big concern for the chamber of mines and for foreign mining companies who own most of the key mines in the country’s copperbelt province.

“Power has been restored in Lusaka and we are now moving on to restore power on the Copperbelt,” Energy Minister Kenneth Konga told Reuters.

It was not immediately clear how much production was affected. Maxwell Mwale, Zambia’s mines minister, said he would give a detailed comment on the power blackout’s impact later.

“Production at the mines is affected …I am yet to receive a full report from the minister of energy,” Mwale told Reuters.

An official at Zambia’s biggest copper producer, Konkola Copper Mines (KCM) — majority owned by London-listed Vedanta Resources Plc (VED.L: Quote) — said its operations had been affected, but the group would issue a detailed statement later in the day.

Sydney Chileya, a spokesman for the Luanshya Copper Mines, owned by China Non-Ferrous Metals Corp. (CNMC), said only limited power supply was available.

Frequent power stoppages are likely to affect Zambia’s plans to increase its copper production to 1 million tonnes next year, from just below 700,000 tonnes in 2009, analysts said.

The country has been trying to entice new investors to the sector as demand for the metal increases.

“It also sends wrong signals to investors on availability of energy despite assurances by the government,” Chibamba Kanyama, a member of country’s main economic think-tank, the Economics Association of Zambia, said.

Foreign mining companies operating in Zambia include Canada’s First Quantum Minerals (FM.TO: Quote), London-listed Vedanta Resources Plc (VED.L: Quote), Equinox Minerals EQN.TO)(EQN.AX: Quote), Glencore International AG [GLEN.UL] of Switzerland and Metorex (MTXJ.J: Quote) of South Africa.

PRICES

Copper prices appeared unaffected by news of the blackout, remaining at a one-week low on Friday as investors overlooked increased risk appetite in the wider markets and remained concerned about demand prospects after weak data from the U.S., the world’s largest economy. [ID:nLDE6370XM]

Lucy Zimba, a spokeswoman for electricity utility Zesco, said the cause was due to a fault on a circuit breaker at the country’s Kariba North Bank hydro station, which set off a chain reaction that led to the countrywide blackout.

Zimba said power supply had been restored to parts of the capital Lusaka, and supply to copper mines would follow.

“The blackout was caused by a fault on a circuit breaker at Kariba North Bank (hydro power plant). We are working on the problem to restore power in Lusaka, after which we will try to switch on the Copperbelt lines,” Zimba told Reuters.

The Copperbelt Energy Corp. (CEC), which buys the electricity from Zesco to supply Zambia’s copper mines, said it would try to provide power to the mines for emergency operations through imports from the Democratic Republic of Congo.

Zesco has said it needs higher tariffs and additional funds to invest in new generating and transmission infrastructure, and the country has said it plans to invest about $6 billion in the next five years to meet its projected energy needs. (Writing by James Macharia; editing by Sue Thomas)
[Reuters]