First Quantum commissions $1.25B Zambia copper expansion amid debt push

First Quantum Minerals (TSX: FM) has commissioned the long-awaited $1.25 billion expansion at its Kansanshi copper mine in Zambia, delivering the country’s largest copper investment in nearly a decade.

The S3 project, first proposed in 2012, includes a new processing plant that nearly doubles Kansanshi’s ore-milling capacity, expands smelter throughput by about 25% and opens up a new pit for mining.

Commissioning of the expansion begins Tuesday, three years after securing board approval, as reported by Bloomberg.

Once Africa’s biggest copper mine, Kansanshi is set to produce an average 250,000 tonnes of copper annually through 2044, up from 171,000 tonnes in 2024. The expansion will bolster Zambia’s mining industry as President Hakainde Hichilema seeks to more than triple national copper output by the early 2030s.

Strategic lifeline

For First Quantum, the Zambian expansion provides much-needed production growth following 2023’s closure of the $10 billion Cobre Panamá mine, which had been the Canadian miner’s flagship operation. The shutdown, ordered by Panama’s Supreme Court, has cost the company roughly $20 million per month in care and maintenance expenses.

With Cobre Panamá offline, Zambia now accounts for more than 90% of First Quantum’s output through Kansanshi and its nearby Sentinel mine. Together, these operations contribute more than half of Zambia’s total copper production, reinforcing the country’s reliance on the red metal for over 70% of export earnings.

$714M debt

To stabilize its balance sheet, First Quantum has raised $714 million through an upsized bond offering, pricing senior notes due in 2029 at 8.625%. The financing, which exceeded the initially planned $650 million, will be used for debt repayment and general corporate purposes, bringing the company’s outstanding notes to about $7.8 billion.

This follows a $1 billion gold streaming deal with Royal Gold earlier this month, monetizing Kansanshi’s by-product gold output while preserving its copper focus.

The company said its priority is maintaining financial flexibility across its portfolio as it navigates political and regulatory challenges, particularly in Panama.

Despite global headwinds, First Quantum’s Zambian mines remain profitable. Kansanshi produced 171,000 tonnes of copper and 105,103 ounces of gold in 2024, marking its highest gold output since 2022. Sentinel added another 231,000 tonnes of copper, bringing consolidated production to 431,000 tonnes.

In the fourth quarter alone, Kansanshi delivered 48,000 tonnes of copper and nearly 30,000 ounces of gold, reinforcing its role as the cornerstone of the company’s African portfolio.

First Quantum’s investment comes as competitors also bet on Zambia’s copper future. Barrick (TSX: ABX, NYSE: B) is investing $2 billion to expand its Lumwana copper mine, also in the mineral-rich North-Western Province.