Zambia reduces power supply to First Quantum Minerals copper mines

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LUSAKA, Aug 15 (Reuters) - Zambia's state power company reduced electricity supply to two First Quantum Minerals (LSE: 0P6E.L - news) copper mines on Monday, after a dispute over new, higher prices, Energy Minister David Mabumba said on Tuesday.

First Quantum had failed to pay the new flat electricity tariff of 9 cents/Kwh agreed by power utility Zesco and mining companies, Mabumba told a news conference.

Mabumba said supply to First Quantum's Sentinel mine was cut from 155 megawatts (MW) to 110 MW while that at Kansanshi mine reduced from 187 MW to 133.

Copperbelt Energy Corp. (CEC), which buys power from Zesco and sells to the mines, had also slashed supply to Glencore (Frankfurt: 8GC.F - news) 's Mopani Copper Mines from 190 MW to 94 MW, the minister said, confirming a statement issued on Saturday (Shenzhen: 002291.SZ - news) by the mining company.

"Those mines that are not paying (the new tariff), we will give them the amount of power equivalent to the new tariff at 9.3 cents/Kwh," Mabumba said.

"If the other customers are paying, why should we be subsidising the industry? I think that will be unfair. The mines that are not paying, they want to blackmail the government."

First Quantum Minerals government affairs officer John Gladston declined to comment.

Mopani Copper Mines said on Monday it had halted all output at its operations in Kitwe and Mufurila after Copperbelt Energy Corp. reduced power supply to the mining firm.

Scotiabank senior base metals analyst Orest Wowkodaw said the reduction of power supply to First Quantum mines had coincided with a maintenance shutdown at Kansanshi and power supply had been redirected to Sentinel Mine.

"Therefore, the company anticipates that there is likely to be no impact to production during the next four weeks. However, if the dispute drags on beyond four weeks, production would indeed be negatively impacted," he said in a note to investors. (Reporting by Chris Mfula; Editing by Adrian Croft)