First Quantum Mining Pursues Renewable Energy in Zambia to Support Ambitious Copper Production Growth

About First Quantum Minerals Ltd.

First Quantum Minerals Ltd. (FQM) is poised for significant growth in copper production in Zambia, its core operating jurisdiction. However, realization of FQM's growth ambitions and the Zambian government's goal to triple national copper output by 2030 is contingent on a massive scale up of reliable, cost-competitive power generation. With coal financing increasingly difficult, FQM sees tremendous potential for large-scale solar and wind in Zambia's power mix. The company is backing this belief, developing a major 430 MW renewables project to supply its flagship Kansanshi and Sentinel mines.

Major Expansions Underway at FQM Flagship Operations

FQM is undertaking expansions at Kansanshi and Sentinel mines totaling $1.35 billion. At Kansanshi, the $1.25 billion S3 expansion will add a new 1.25 Mtpa processing plant and upgrade the smelter, boosting production by 60% to 250 ktpa copper and extending mine life to 2044. Meanwhile, FQM fast-tracked its $100 million Enterprise nickel project at Sentinel, achieving first production within a year. The project involves conveying ore 12 km from the Enterprise deposit to utilize surplus capacity at Sentinel's processing plant. Once ramp up is complete in 2024, Enterprise will be Africa's largest nickel mine at 30 ktpa contained nickel.

Importantly, these significant investments exemplify FQM's confidence in Zambia's improved investment climate and mining policy reforms. The S3 and Enterprise expansions support the government's plan to triple Zambian copper output by 2030 to over 3 million tonnes. Achieving this ambitious target will require the mining sector's power demand to roughly triple as well, underscoring the urgent need to facilitate major power generation investments.

Zambia's Electricity Supply Constrained, Risks to Growth

Zambia has rapidly scaled up power generation capacity, largely through commissioning of large hydropower schemes. However, capacity growth over the past two decades will need to be replicated for decades ahead to meet projected demand growth. The mines will be key offtakers but not the only source of increased electricity demand. Residential, industrial and export demand are all expected to rise substantially.

Existing hydropower facilities like the massive Kariba North Bank station are already stretched. Kariba reached its minimum operating level in early 2022 due to demand exceeding supply, not an abnormally low rainy season. While hydropower expansion continues, the government recognizes much more solar, wind and other generation will be needed.

Strong Potential for Large-Scale Wind and Solar

Zambia possesses excellent solar resources across the country and consistent wind resources in eastern highlands. Wind power generation aligns well with solar, as wind speeds are highest at night. Wind output also rises during the dry season when hydropower output declines.

FQM has partnered with Chariot Energy and Total Eren to develop a 430 MW wind and solar project in Eastern Province, one of the largest renewables projects announced in Sub-Saharan Africa. The $1 billion project will supply about 60% of Kansanshi's power needs from 2025, supporting the S3 expansion.

For FQM, the decision to invest in utility-scale renewables reflects the reality that without new affordable generation, Zambia's copper production growth outlook is at risk. Renewables can be scaled up rapidly using global supply chains and expertise, acting as a bridge until major hydro schemes come online. As a major power user, FQM is ready to lead by example investing in wind and solar to enable Zambia's mining growth ambitions.

FQM's renewable energy project in Zambia could be a good investment opportunity for investors

Supports Long-Term Production Growth

• The 430 MW wind and solar project will provide low-cost power to support FQM's major expansions at its flagship Kansanshi and Sentinel copper mines. This new renewable energy capacity enables significant near-term production growth and extends mine life at Kansanshi by 20 years.

Extensive Mine Life with Upside Potential

• FQM's Zambian mines have exceptionally long mine lives, with Kansanshi now extending out to 2044 and Sentinel beyond 2035. These assets have expansion potential beyond what's currently planned, providing considerable additional upside.

Diversifies Power Supply, Reduces Costs

• The project will meet about 60% of Kansanshi's power needs, reducing exposure to drought-impacted hydropower. Cost-competitive renewable energy will materially lower FQM's power costs over the long term.

Strong ESG Credentials

• The wind and solar project has minimal environmental impact, utilizing already deforested lands. It will reduce FQM's carbon emissions and aligns with Zambia's renewable energy strategy.

First Mover Advantage

• FQM is among the first miners taking a proactive approach to developing utility-scale renewables in Zambia. Being a first mover provides advantages in securing the best project sites.

Proven Partners

• Partnering with experienced renewable energy developers like Total Eren and Chariot helps derisk execution and ensures knowledge transfer to FQM.

In summary, the project provides long-term benefits supporting FQM's core copper business while demonstrating innovation and ESG leadership. These qualities make it appealing within the context of FQM's growth-oriented investment case.