Zambia nickel mine builds own power line

By Haggai Chilabi

MUNALI HILLS, Zambia, Feb 26 (Reuters) - Zambia is on track to complete the construction of a dedicated power supply line to its first nickel mine where production of 8,600 tonnes of nickel will commence mid-year, an industry official said.

Sixtus Mulenga, general manager of Albidon Zambia Ltd., a unit of Australia's Albidon Ltd. (ALB.AX) (ALDq.L), said the building of a power line to supply electricity only to the Minali nickel mine was progressing well.

"We have a dedicated power line from Kafue Gorge to make sure that we have power all the time. Construction of the power line is progressing very well and we should be commissioning production at the mine mid this year," Mulenga told Reuters.

Mulenga was speaking late on Monday during a visit to the Munali nickel mine by eight directors of the International Monetary Fund who are in Zambia to assess economic development and inspect some of developmental projects.

He said Albidon had agreed to finance the power line at a cost of $3 million stretching nearly 70 km (44 miles) from Kafue Gorge power station to Munali Hills, south of the capital Lusaka.

Albidon was constructing its own power line to have sufficient power supply at the mine and avoid power outages, which have affected the rest of Zambia's copper and cobalt mines.

Nearly all the copper and cobalt mines have slashed output due to power shortages which have worsened in this mineral-rich country of 12 million people since January this year.

Mulenga said Albidon Zambia also had long-term plans to set up a nickel smelter. He gave no further details.

In 2007, Albidon Zambia said annual production would comprise approximately 8,600 tonnes of nickel, 1,400 tonnes of copper, more than 400 tonnes of cobalt and 15,000 ounces of platinum group metals (PGM) in concentrate per annum.

Zambia is one of the world's top copper and cobalt producers but Munali nickel mine will be the country's first producer of nickel.

The Munali nickel mine has a 10-year life-span which could be extended through further exploration.

(Writing by Shapi Shacinda; editing by Chris Johnson)