UPDATE 1-Zambia to miss 670,000 T '07 copper target - c.bank

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By Shapi Shacinda

LUSAKA, Dec 28 (Reuters) - Zambia is unlikely to attain its 670,000 tonnes finished copper target for 2007 after heavy rains slowed production at some mines, especially open pits, the central bank said on Friday.

Caleb Fundanga, the Bank of Zambia (BoZ) governor, said the copper and cobalt mines had not recovered from flooding earlier in the year and that current heavy rains experienced in the country could cause more flooding and affect 2008 output.

He said that production prospects were, however, bright for 2008 and beyond barring the current heavy rains. The central bank did not give a figure for expected output in 2008.

"It might be difficult to achieve the 670,000 metric tonnes ... I don't think we can produce so much (copper in December) to catch up. I must say that the flooding has also affected the development of new mines," Fundanga told a news conference.

"The heavy rains did affect our mines especially open pits and as we can see this might be repeated as we already have heavy rains," Fundanga added.

Fundanga said fresh BoZ data showed that the copper mines produced 456,893 tonnes of finished copper by November this year compared with 457,730 tonnes output in the same period in 2006.

He said developments at the Lumwana mine, a unit of Australia's Equinox Minerals Ltd., which is due to start producing 169,000 tonnes of copper by 2009 and a new project by the Konkola Copper Mines (KCM) that would come on stream the same year would help raise production.

DOUBLE OUTPUT

KCM, a unit of London-listed Vedanta Resources PLC (VED.L) and mineral-rich Zambia's largest mining unit, is developing the Konkola Deep Mining Project (KDMP), which will double total KCM production to 400,000 tonnes by 2009.

"Going forward most people think that by the year 2011, we can achieve more than 1.0 million tonnes. This is good but it can also affect the price, because when you produce so much, sometimes, it affects the price and total earnings might be lower," Fundanga said.

He said what was required was stability of world metals prices around $6,000 per tonne to keep the country's revenue earnings from copper mines sustained.

Fundanga said new copper discoveries had caused a rosy picture copper mining, but warned that the country needed to diversify its economy to create more employment.

Production would also be shored up by cross-border mining by some foreign firms which mine copper inside the Democratic Republic of Congo and process at Zambian smelters, he said.

"If you look at cross-border mining, new mines in the Congo are using our facilities to process concentrate from Congo. This is adding value although the original copper is coming from Congo," Fundanga said.

Copper production is Zambia's main economic lifeblood and the vast mines are a major employer in this southern African country of 12 million people. Its biggest copper producer is KCM. (Reporting by Shapi Shacinda; editing by James Jukwey)