KCM’s June copper deliveries disrupted by liquidation order

A customer of Konkola Copper Mines (KCM) has been informed that it will not be receiving copper deliveries in June after the Zambian government’s recent liquidation order on the supplier.

KCM, majority owned by Vedanta Resources, is the operator of the African country’s largest copper smelter, Nchanga, with capacity for 311,000 tonnes per year.

“KCM just told us we would not be able to receive [our] June tonnages. We have no idea when deliveries will resume,” the client said on Thursday June 6.

The notice from KCM came after the government filed a liquidation order on May 21 with the intention of forcing India-based Vedanta out of the country. The apparent takeover, the first of its kind, has sent shockwaves through the Zambian copper industry.

Nonetheless, KCM, which is a major producer of blister copper and anodes, has not yet declared force majeure.

“I understand [KCM] has delivered some metal to other traders because there’s still some limited production,” a second trader source said.

But it was difficult to tell whether Nchanga was still operating, because both Vedanta and the liquidators were being tight-lipped about the status of the asset at the heart of controversy. Vedanta has not responded to an inquiry regarding the operation status at the time of publication. 

According to data from geospatial platform RS Metrics, satellite images of the Nchanga smelter show that copper stock only covered 742 square meters at the facility in May. In April 2019, there was more than 1,094 square meters of copper in the same facility, close to the town of Chingola.

A source with a buyer of KCM anode told Fastmarkets that the volumes in stock could be estimated at 7-9 tonnes per square meter. Nchanga’s stock level in May would thus have been 5,195-6,680 tonnes.

The drop in Nchanga’s inventory level could mean that income flow was being generated from the sale of inventory to support operations during the transition period to state ownership.

To keep the smelter running, KCM would need working capital of $25-50 million per month, according to mining expert Thilasoni Chikwanda of advisory group Kurema Africa.

“KCM is heavily in debt, and all the income KCM gets is foreign-generated, from copper sales which are held externally by Vedanta,” Chikwanda told Fastmarkets.

A court hearing will be held on June 11, but a liquidation on such a scale was expected to take a considerable amount of time. The principal question was whether KCM would generate or drain revenue during the process.

“This raises the point of whether the government of Zambia will finance the [operating] costs, because banks and potential investors will not provide this money under the current legal challenges,” Chikwanda said, adding that a liquidator would not have the power to borrow or to request that shareholders finance the company.

Certain trading houses still have long-term contracts with KCM for supplies of blister copper, with the amounts yet to be delivered ranging from “negligible” to as much as 10,000 tonnes. KCM’s blister copper is consumed by some major refineries in China.

Blister copper refinement charges (RCs) stayed at $160-170 per tonne cif China on May 31, unchanged from a month earlier.

What to read next
The global copper market has finally received the widely anticipated news that imports to the US will be tariffed from August 1. The finer details of the tariffs, including their scope, and whether key copper-exporting nations like Chile, Canada and Peru will be exempt, remain unclear.
LME copper prices took a significant hit following US President Donald Trump's announcement of a potential 50% tariff on copper imports. The uncertainty surrounding the timeline and implementation of the tariff has left market participants hesitant, with analysts noting its immediate impact on price momentum and trading activity.
Fastmarkets has launched MB-AL-0424 Aluminium P1020A premium, fob Indonesia, $/tonne on July 9 due to an expected increase in Indonesia-origin aluminium exports. MB-AL-0424 Aluminium P1020A premium, fob Indonesia, $/tonneQuality: P1020A or 99.7 % Minimum Al purity (Si 0.10% max, Fe 0.20% max) in line with LME specifications. Ingot, T-bar, sowQuantity: Min 500 tonnesLocation: FOB IndonesiaTiming: […]
To increase the transparency of our methodology, Fastmarkets clarifies that the quotation period of the MHP nickel payable indicator is the month of delivery, or the month M. Any data points Fastmarkets received otherwise will be normalized to the M month based on the monthly spreads of the prevailing exchange-traded Class-1 nickel reference price, or […]
'Probably miscalculated’ assumptions at Kakula mine force Ivanhoe to overhaul entire Kamoa-Kakula complex, explains CEO Marna Cloete.
Following an initial consultation with the market, Fastmarkets is proposing to:  The new specifications would be as follows, with amendments in italics: MB-CU-0002 Copper grade 1 cathode premium, ddp Midwest US, US cents/lb Quality: Grade A 99.9935% min copper cathode conforming to LME specifications BS EN 1978:2022 – Cu-CATH-1 or Grade 1 Electrolytic Copper Cathode ATSM B1115-10 Quantity: Min […]