Last updated: June 14, 2010
Namibia Custom Smelter
Tsumeb, Namibia
Profile
The Namibian Custom Smelter ("NCS") is located in Tsumeb, Namibia approximately 430 km north of the capital, Windhoek. Tsumeb is the closest town to the Etosha National Park and has a population of 14,000 people. The smelter was constructed in the early 1960’s to process concentrate from the Tsumeb copper mine and is one of only five commercial-scale smelters in Africa. It is linked by rail to the Atlantic port of Walvis Bay in Namibia. The facility consists of two primary smelting furnaces, the old reverb furnace as well as the refurbished Ausmelt furnace and employs close to 400 people.
The smelter is one of only a few in the world which is able to treat arsenic and lead bearing copper concentrates and is therefore able to conclude long term favourable contracts to treat such concentrates. Both blister copper and arsenic trioxide (As2O3) are produced from the concentrates. The blister copper is delivered to refineries for final processing and the As2O3 is sold to third party customers.
Background
On March 24, 2010, DPM completed the purchase of Weatherly International’s ("WTI") smelter business in Tsumeb, Namibia by way of a share purchase of NCS and the acquisition of certain assets. DPM acquired 100% of the shares of the operating company, NCS, together with all land, plant and other assets used by or in connection with the smelter. The consideration paid to WTI by DPM on completion of the smelter purchase was: (i) US$33 million, consisting of US$18 million in cash and the issuance of 4,446,420 fully paid common shares of DPM; and (ii) the assumption by DPM of all third party obligations of NCS, a subsidiary of WTI.
Under an existing agreement , Louis Dreyfus Commodities Metals Suisse SA ("LDC") has exclusive rights to purchase the Chelopech concentrate for toll processing through NCS and to source the balance of the concentrate for the smelter through to and including 2013. LDC will continue to have exclusive rights to purchase the Chelopech concentrate for toll processing through NCS and to source the balance of the concentrate for the Tsumeb smelter through to and including 2020.
2010 Objectives
The Ausmelt has been successfully commissioned and is now in full production. The installation of an oxygen plant to increase the efficiency of the Ausmelt was completed in late 2009 and commissioning is currently underway. The oxygen plant is expected to deliver 170 tonnes of oxygen per day and double the capacity of the smelter from 120,000 to approximately 240,000 tonnes of concentrate per year.
Long-Term Objectives
The Company has also developed a longer term (five year) plan with respect to the smelter operations, which will include incremental improvement measures with respect to management of smelter emissions and measures to address SO2 emissions by the possible construction of an acid plant. A pre-feasibility study on generating acid from the smelter off gas has been completed by WTI.
