The current suspense is whether the Zambian government will introduce investment partners to jointly hold Mopani equity? If this is the case, mining companies with a Chinese background will be placed on the shortlist first. "
The Minister of Mining of Zambia, Richard Musukwa, said on the Lusaka Diamond TV program this week that Glencore and First Quantum intend to sell 90% of the Mopani copper mine they hold, and that the Zambian state-owned copper company ZCCM-IH is willing to borrow money.
Mopani produced 119,000 tons of copper in 2018. Glencore holds 73.1% of the shares and acts as the operator. First Quantum Minerals holds 16.9% and ZCCM-IH holds 10%.
In April of this year, Glencore suspends production and maintenance of Mopani on the grounds that it can respond to the new crown epidemic and dismissed its employees. However, after reporting to the government, the government refused and threatened to revoke Mopani's mining license. The Zambian government also temporarily detained Mopani's mine manager Nathan Bullock before leaving the airport. The Zambian government stated that Glencore did not give sufficient time advance notice before suspending mining operations.
In May, Mopani stated that they will resume mining operations for 90 days, but it is expected that they will continue to shut down for maintenance.
On July 16, Glencore stated that it would appeal the decision of the Ministry of Mineral Resources of Zambia to reject its proposal to suspend operations and will temporarily maintain operations until the outcome of the appeal process.
Mining Minister Musukwa said in a statement that 10% of the shares are “not enough” to determine Mopani’s future, so ZCCM-IH is seeking a larger stake to “hold a controlling stake in Mopani”, which means ZCCM-IH It will increase its holdings by at least 41%, which is still a challenge for this state-owned enterprise that lacks capital.
Glencore has confirmed through news channels that it is negotiating with Mopani's existing shareholder ZCCM-IH and other shareholders on ZCCM-IH's possible acquisition of more shares from Glencore.
In Glencore's semi-annual report, a significant impairment of US$1.144 billion was provided for Mopani's assets. The reasons for the impairment included technical analysis, delays in key development projects, increased costs, and the impact of planned shutdowns and maintenance. Among them, shutdown maintenance needs to be approved by the government. After the impairment, Mopani's book value was US$704 million, which also included some uncertain tax assets.
In the first half of the year, Glencore's copper plate produced 539,000 tons of copper and achieved sales revenue of 7 billion US dollars; of which, the African copper plate achieved sales revenue of 1.1 billion US dollars, which was mainly contributed by Katanga of the Democratic Republic of Congo (134,000 tons of copper and 12,500 tons of cobalt) , While Mopani in Zambia produces only 6,700 tons of copper on its own, and its contribution is minimal. Mopani smelter processed third-party ore and produced another 20,000 tons of copper.
In April of this year, when the international capital and commodity market prices fell to the bottom, Glencore privatized the Canadian-listed Katanga Mining (KAT) at the speed of the blitz, thereby taking full control of the Congo KCC copper mine. When production was discontinued and Mopani was basically discontinued, KCC contributed a valuable increase, allowing Glencore to let Zambia go anytime.
The Democratic Republic of the Congo and Zambia are the areas where China’s overseas investment is most concentrated. In contrast, Zambia is located at the southeast end of the copper belt. The ore bodies are deeply buried, dominated by sulfide ore, with low grades. After years of development, resources have been further improved. Barren, but the advantage (or the previous advantage) is the English-speaking country, the political environment is relatively clear, the degree of economic development is relatively high, the people are peaceful, and the distance to the sea in South Africa is close, the transportation and energy prices are relatively low, making the development cost relatively low .
In addition to Mopani, the Lumwana copper mine owned by Barrick has been on sale.
In addition, Jiangxi Copper previously purchased nearly 20% of First Quantum’s shares in the secondary market. There are also rumors that it will seek to obtain a small amount of equity in First Quantum’s assets in Zambia. Of course, the assets here refer to First Quantum. Kishanshi and Sentinel directly owned.
