Zambia's Konkola mine plans to purchase Congo copper

LUSAKA, Jan 6 (Reuters) - Zambia's largest copper producer plans to start purchasing copper concentrate from the Frontier Mine in the Congo and has taken new measures to cut production costs, company officials were quoted as saying.

The Konkola Copper Mines (KCM) said it was talking to owners of the Frontier mine in the Democratic Republic of Congo (DRC) and the Chibuluma and Kansanshi mines in Zambia to procure "feed" to process at the new Nchanga copper smelter, which has an annual capacity of 300,000 tonnes.

KCM's Vice President of Finance Vinod Bhandawat said the mining firm, majority owned by London-listed Vedanta Resources (VED.L) was about to sign a deal to purchase all of Chibuluma's copper concentrate, but no figures were given.

"We are looking for substantial quantities of concentrates from Kansanshi and Frontier to balance the capacity of our new smelter," Bhandawat was quoted as saying in the internal publication, Konkola News, obtained by Reuters on Tuesday.

"(About) 25,000 dry metric tonnes will give us about 7,500 tonnes of copper (cathode) every month," he said.

The Nchanga smelter plant, currently undergoing commissioning, suffered setbacks nearly a fortnight ago when a technical fault forced KCM to temporarily suspend operations.

Purchasing concentrates from other mines is one of many projects that KCM plans to raise copper output to 500,000 tonnes in 2010 from projected production of 200,000 in 2008.

KCM also operates the Konkola and Nchanga open pit mines, Nkana smelter and the satellite Fitwaola mine.

The firm is currently developing the Konkola Deep Mining Project (KDMP), which is due to come onstream in 2010 and will produce 150,000 tonnes copper per year.

KCM said it had embarked on an aggressive cost-saving programme which yielded savings of $3 million between September and November 2008.

Costs that averaged $10 million per month were down to $7.48 million in November and KCM planned to reduce costs to $6.5 million by December, the newsletter quoted the general manager for Nkana smelter, David Ng'andu, as saying.

"This is an extremely steep challenge, but it is one which the team is willing to take on," Ng'andu said.

Ng'andu said KCM also reduced reliance on diesel to fire the acid plant by switching to heavy fuel oils and limited the use of coal in daily production while introducing strict financial controls.

Zambia is Africa's largest copper producer and the copper mines are a major employer and the country's economic mainstay. (Reporting By Shapi Shacinda, Editing by Peter Blackburn)