THE YEAR IN BRIEF
During FY2021, Zinc International continued to ramp up production from its flagship project Gamsberg mine and achieved production of 145 kt. Several best demonstrated performances on throughput, milled tonnes and improved recoveries were achieved in Q4FY21.
Black Mountain continued to have a stable production of 58 kt, slightly lower than FY2020 due to lower head grades and mining challenges due to unplanned equipment breakdowns. A new product line of recovering magnetite from tailings was established in FY2021.
In spite of COVID-19, robust mitigation measures were put in place to ensure minimal impact on production.
Skorpion Zinc has been under Care and Maintenance since the start of May 2020, following cessation of mining activities due to geotechnical instabilities in the open pit. Activities to restart the mine are progressing well.
Significant reduction in cost was achieved in FY2021 through increased volumes, cost containment measures, consumption efficiencies and exchange rate depreciation.
THE YEAR IN BRIEF
During FY2021, Zinc International continued to ramp up production from its flagship project Gamsberg mine and achieved production of 145 kt. Several best demonstrated performances on throughput, milled tonnes and improved recoveries were achieved in Q4FY21.
Black Mountain continued to have a stable production of 58 kt, slightly lower than FY2020 due to lower head grades and mining challenges due to unplanned equipment breakdowns. A new product line of recovering magnetite from tailings was established in FY2021.
In spite of COVID-19, robust mitigation measures were put in place to ensure minimal impact on production.
Skorpion Zinc has been under Care and Maintenance since the start of May 2020, following cessation of mining activities due to geotechnical instabilities in the open pit. Activities to restart the mine are progressing well.
Significant reduction in cost was achieved in FY2021 through increased volumes, cost containment measures, consumption efficiencies and exchange rate depreciation.
SAFETY
Gamsberg mine recorded a slope failure in the South Pit on 17 November 2020. One fatality was recorded and efforts to locate the one missing employee of our business partner remains a priority. A dedicated team has been constituted to undertake the recovery efforts. Gamsberg LTIFR improved from 1.10 in FY2020 to 1.08 in FY2021.
Black Mountain Mine had a fatality free year and saw a reduction in high potential risk incidents. Employee engagement is integral to our safety strategy and both Visible Felt Leadership Interactions and Planned Task Observations are conducted regularly by leaders and front-line supervisors to coach and address behavioural issues.
Both Black Mountain and Gamsberg Mines are embarking on a Critical Control Management programme to ensure that all the fatal risk protocols are in place and understood by all the employees.
Leadership remains key to the success of our safety improvement programme. Our leaders have recently undergone legal compliance training and plans are in place to provide risk-management training and improve risk management interventions and decision-making.
Water consumption at Gamsberg, Zinc International
OCCUPATIONAL HEALTH
At Vedanta Zinc International, we take the health and safety of our employees and stakeholders very seriously and we remain committed to communicating timely and transparently to all stakeholders. Since the outbreak of the pandemic, we have recorded 227 positive cases, 222 recoveries, 3 active cases and 2 deceased. We have put stringent protocols to mitigate the spread and we have rolled out awareness initiatives to assist communities in which we operate.
Airborne particulate management remains a key focus in reducing lead and silica dust exposures of employees. Black Mountain Mine has reduced blood lead withdrawals from 12 in FY2020 to 6 in FY2021. As a part of our Employee Wellness Programme, we are focusing on increased participation of employees and communities in VCT for AIDS / HIV, blood donation and wellness; 2,172 employees were screened for tuberculosis during the year.
ENVIRONMENT
Gamsberg successfully reduced water consumption in the plant to 0.65 m3/tonne and reduced the levels of the Tailings Storage Facility return water dam to prevent future overflows from the dam. During a recent ISO 14001; 2015 recertification, audit Black Mountain Mining successfully retained the certification with no major non-conformances.
The draft Gamsberg Nature Reserve Strategic Management Plan has been prepared and submitted for public comments. The final Management Plan will be submitted to MEC for approval. BMM is in negotiations to secure additional farms to be included in the Gamsberg Nature Reserve to ensure compliance to the Biodiversity Offset Agreement.
PRODUCTION PERFORMANCE
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Total production (kt) | 203 | 240 | (16) |
| Production – mined metal (kt) | |||
| BMM | 58 | 66 | (12) |
| Gamsberg | 145 | 108 | 34 |
| Refined metal Skorpion | -* | 67 | - |
* Skorpion produced 0.6 kt in April 2020 before moving into Care and Maintenance for the rest of the year
OPERATIONS
During FY2021, our total production stood at 203,000 tonnes, 16% lower y-o-y. This was primarily due to Skorpion Zinc going into Care and Maintenance, and BMM mining challenges which were partly offset by higher production at Gamsberg.
At BMM, production was 58,000 tonnes, 12% lower y-o-y. This was mainly due to lower grade of lead (2.3% vs 2.9%) and hence lead lower recoveries (84.1% vs 85.6%) and 6% lower throughput resulting from lower mining performance.
Gamsberg’s production was at 1,45,000 tonnes as the operation continues to ramp up with improved performance every quarter – Q1 FY2021 at 25,000 tonnes, Q2 at 35,000 tonnes, Q3 at 43,000 tonnes and Q4 at 41,000 tonnes (Q4 FY21 performance slightly impacted by lower mine grades). Our plant operations were partially impacted in November due to the slope failure incident. While mining only started in phases in December and January 2021, plant continued to run on healthy ROM stockpile.
At Skorpion Zinc, engagement with technical experts to explore opportunities of safely extracting the remaining ore is ongoing. The pit optimisation work is complete. The business is currently evaluating options to restart mining. Further there is significant progress made to make the Skorpion Refinery Conversion Project economically feasible. Previously completed feasibility study is being updated. We target to start the on-ground execution by H1 FY2022.
At both BMM and Gamsberg, production was also slightly impacted by the COVD-19 lockdown during Q1FY21.
UNIT COSTS
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Zinc (US$ per tonne) unit cost | 1,307 | 1,665 | (22) |
The unit cost of production decreased by 22% to US$1,307 per tonne, from US$1,665 per tonne in the previous year. This was mainly driven by the Company’s strong focus to reduce the cost, along with reduction through higher production at Gamsberg, local currency depreciation, optimising consumables usage, higher copper credit offset by higher TCRCs and annual inflation.
FINANCIAL PERFORMANCE
(` crore, unless stated)
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Revenue | 2,729 | 3,128 | (13) |
| EBITDA | 811 | 380 | - |
| EBITDA margin | 30% | 12% | - |
During the year, revenue decreased by 13% to `2,729 crore, driven by lower volumes compared to FY2020 due to Skorpion Zinc going under Care and Maintenance, partially offset by higher price realisations. EBITDA increased significantly to `811 crore, from `380 crore in FY2020 mainly on account of higher price realisation and improved cost.
PROJECTS
Refinery conversion – A substantial progress has been made on Skorpion Zinc Refinery conversion project with the FEED completion, feasibility study, tendering activities and techno-commercial adjudication. All regulatory approval is in place to start project execution. Previously completed feasibility study is being updated. With power tariffs being very critical for the viability of the project, discussions are ongoing with the state power utility and the option of renewable power is also being explored. We can start the on-ground execution by H1 2022 subject to the confirmation of power tariff and approval from the Board.
Swartberg Phase 2 – Based on the completed feasibility study, the finalised mine design and environmental authorisation has been received in Q3FY21. Based on the proposed integration schedule with BMM, the underground operations project is planned to be executed in FY2023.
Gamsberg Phase 2 - 54 mt reserves have been added post completion of feasibility study for expansion which can result in additional 200 ktpa MIC production over and above current production. The mine design and the new reserve statement was completed with the Resource to Reserve conversion as scheduled. The project is currently split into two distinctive sections, one focused on increasing the mining to 9 mtpa and the second focused on construction of a duplicate concentrator plant, effectively doubling the capacity.
Gamsberg Smelter – We have received the environmental approval for bulk water pipeline construction and outcome of ESIA for Gamsberg Smelter is also expected in April 2021. The SEZ application process has progressed well. We are engaging with the Government of South Africa on critical success factors like SEZ, power price, sulphuric acid offtake, logistics infrastructure and other regulatory approvals.
Black Mountain Magnetite project – This is a project to recover iron ore/magnetite from the BMM tailings. The feasibility was completed and pilot plant of 60 ktpa capacity was started in Q4FY21. To fast track the project and take advantage of the current favourable market conditions a quick start modular 0.7 mtpa plant was decided, based on treating current fresh tailings. This project will be put up for approval to start the execution in H1 FY2022 with target of completion by end of FY2022.
EXPLORATION
Certified Mineral Reserves and Resources at Zinc International increased by 8% to 566.4 mt containing 30.3 mt of metal. Gross additions to reserves and resources, after depletion, amounted to 41.3 mt of ore and 1.8 mt of metal. Despite depletion, reserve levels were successfully maintained at the same level as 2020, and amounted to 139.7 mt containing 8.3 mt of metal. The most significant contributor to the addition of metal in resources was the declaration of a maiden resource at Gamsberg South (23.2 mt @ 7.1% Zn and 0.6% Pb).
STRATEGIC PRIORITIES & OUTLOOK
Zinc International continues to remain focused to improve its production by sweating its current assets beyond its design capacity, debottlenecking the existing capacity, and adding capacity through growth projects.
Our priority is to ramp up the performance of our Gamsberg Plant at designed capacity and simultaneously develop the debottlenecking plan to increase plant capacity by 10% to 4.4 mt ore throughput. Likewise, BMM continues to deliver stable production performance and the focus is to debottleneck its ore volumes from 1.6 mt to 1.8 mt.
Skorpion is expected to remain in ‘Care and Maintenance’ for H1 FY2022, while the management is assessing feasible and safe mining methods to extract ore from pit 112. Zinc International continues to drive the cost reduction programme to place Gamsberg operations on the 1st quartile of global cost curve with the production cost less than US$1,000 per tonne.
Additionally, core growth strategic priorities include:
