First Quantum commissions $1.25B Zambia copper expansion amid debt push

First Quantum Minerals (TSX: FM) has commissioned the long-awaited $1.25 billion expansion at its Kansanshi copper mine in Zambia, delivering the country’s largest copper investment in nearly a decade.

The S3 project, first proposed in 2012, includes a new processing plant that nearly doubles Kansanshi’s ore-milling capacity, expands smelter throughput by about 25% and opens up a new pit for mining.

Commissioning of the expansion begins Tuesday, three years after securing board approval, as reported by Bloomberg.

Once Africa’s biggest copper mine, Kansanshi is set to produce an average 250,000 tonnes of copper annually through 2044, up from 171,000 tonnes in 2024. The expansion will bolster Zambia’s mining industry as President Hakainde Hichilema seeks to more than triple national copper output by the early 2030s.

First Quantum’s investment comes as competitors also bet on Zambia’s copper future. Barrick (TSX: ABX, NYSE: B) is investing $2 billion to expand its Lumwana copper mine, also in the mineral-rich North-Western Province.

Strategic lifeline

For First Quantum, the Zambian expansion provides much-needed production growth following 2023’s closure of the $10 billion Cobre Panamá mine, which had been the Canadian miner’s flagship operation. The shutdown, ordered by Panama’s Supreme Court, has cost the company roughly $20 million per month in care and maintenance expenses.

With Cobre Panamá offline, Zambia now accounts for more than 90% of First Quantum’s output through Kansanshi and its nearby Sentinel mine. Together, these operations contribute more than half of Zambia’s total copper production, reinforcing the country’s reliance on the red metal for over 70% of export earnings.

On Tuesday, the copper producer issued an update to its 6.875% 2027 senior notes, relaying that bond holders sold $714 million (C$989 million) back to the company, with an outstanding amount of nearly $35.4 million remaining in the market.

Also this month, the miner commenced an offer to purchase outstanding 9.375% senior secured second lien notes due in 2029 up to a maximum of $250 million, and it issued a new bond, increasing the amount to $1 billion from the original $750 million, offering it at a rate of 7.25% with a term to 2034.

“These bond market moves are unrelated to the increased costs of maintaining Cobre Panama,” a company spokesperson said by email on Wednesday.

“These costs will be met principally by the sale proceeds of the copper concentrate that we recently shipped from Cobre Panama.”

Shares in First Quantum closed 1.8% weaker on Tuesday in Toronto but have gained 21% this year to $22.98 apiece, valuing the company at $19.2 billion.

An earlier version of this story incorrectly stated that First Quantum had added $714 million to its debt. Mining.com regrets the error.