Potential bidders, including the Rio Tinto Group and Saudi Arabia’s Manara Minerals Investment Co., are contemplating acquiring a stake in the Zambian copper mines owned by First Quantum Minerals Ltd.
Japanese firms Mitsui & Co. and Sumitomo Corp. are also reportedly examining the assets. The sources, who requested anonymity due to the private nature of the discussions, stated that First Quantum is willing to sell up to 30% of its Zambian mines, depending on the proposals it receives. The company is expecting initial bids in the upcoming weeks.
Chinese companies such as Zijin Mining Group Co. and Jiangxi Copper Co., the latter being First Quantum’s second-largest shareholder, might also express interest in the Sentinel and Kansanshi mines. However, the process is still in its early stages, and there is no guarantee that these parties will submit bids.
Since November last year, Jiangxi has invested about US$745M in First Quantum through debt, equity and a prepayment copper deal. Still, despite being one of the biggest shareholders, Jiangxi does not have any say in board decisions.
Following Bloomberg’s report on the interest in the Zambian mines stake, First Quantum’s shares surged by up to 6.9% to C$15.80 in Toronto.
In the previous year, Zambia was responsible for approximately half of First Quantum’s copper production and revenue, contributing over US$450M in operating profit.
After being compelled to shut down its primary copper mine in Panama due to public protests last year, First Quantum is now selling a stake in its Zambian assets. This has led the company to seek ways to refinance the debt incurred from the construction of the mine, already selling an estimated US$1B in stock and raising US$1.6B from a notes offering this year. It has also indicated that it might consider selling off smaller mining assets. A Sumitomo spokesperson stated that the company is continuously looking for opportunities to invest in copper operations but declined to comment on specific deals.
