FQM Seeking Alternative Routes for Export Amid South Africa Lockdown
FIRST Quantum Minerals is looking for alternative ways to export its copper from Zambian mines after South Africa imposed restrictions.
The Toronto-listed company also said Zambian copper production was “better than expected” this year in spite of the COVID 19 threat.
“Activities in Zambia have been slightly better than expected since the beginning of the year, with good volumes and recoveries of mixed and sulfide ores in Kansanshi and improved mining volumes and ore grades at Sentinel,” the company said in an update.
“After announcing stricter restrictions in South Africa, including port and transit route controls, the company is managing the export of its Zambian production through alternative routes,” he added.
South Africa has launched a 21-day lockdown which started at midnight on March 26, but the country’s government announced a national state of disaster on March 15 in response to the outbreak of COVID-19. After that, some ports and entry points were closed.
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South Africa has 72 ports of entry into the country which includes land, sea and airports. 35 of the 53 land ports were closed. Two of the eight seaports were closed for passengers and crew changes.
In preparation for an extended period of medical protocols, travel restrictions and commodity prices that could remain depressed until 2021, the company had introduced cost reductions that would affect executives’ salaries.
“As part of its immediate efforts to reduce costs, the company has introduced a temporary 20% salary reduction for certain senior officers, including the CEO,” said the company.
Philip Pascall, CEO of the company, said: “These times are unprecedented and require adaptability and flexibility that are part of the culture that we have built at First Quantum.”
First Quantum said it was well capitalized. As of December 31, the company had unlimited net cash of $ 523 million, a revolving credit facility of approximately $ 700 million that was not drawn, giving it a pro forma cash funds and credity availability totaling about $ 1.2bn.
The copper price was hedged through the forward sale of 343,025 tonnes of copper upto January 2021, using both unexpected copper forward sales and unimagined zero-cost collar sales contracts. It had also sold forward part of its nickel production.
“The commitment to deleveraging the balance sheet remains and a plan is in place to deleverage and manage debt in the current commodity price environment,” it said.
