Zambia’s ZCCM-IH Approves Major Stake Sale in Mopani Copper Mines to UAE Firm
In a significant move within the mining sector, Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH) shareholders have approved the sale of a 51% stake in Mopani Copper Mines (MCM) to Delta Mining, a subsidiary of the United Arab Emirates' International Resources Holding. The agreement, finalized at ZCCM-IH's extraordinary general meeting on February 23, values the transaction at USD 1.1 billion.
Under the terms of the deal, ZCCM-IH will maintain a 49% interest in MCM and retain one seat on the company's board, while Delta Mining will take five seats. The financial structure of the transaction includes USD 620 million in equity and USD 488 million in loans from Delta, contingent upon the satisfaction of certain conditions. A portion of the equity, USD 220 million, will be paid at the transaction's close, with up to USD 130 million provided as an interim financing loan to be later converted into equity.
The funding arrangement also outlines that USD 400 million of the loan component will be allocated to settle part of the original debt from the Glencore transaction, which stands at USD 1.5 billion plus accrued interest. An additional USD 88 million in shareholder loans will be made available for future needs.
This strategic decision comes at a crucial time for Zambia's mining sector, which experienced a downturn last year with an 8.2% drop in copper production, primarily due to operational challenges at MCM and Konkola Copper Mines (KCM). The sector's decline was also attributed to low ore grades and flooding at some mining sites. However, with the new partnership and investment, there is an optimistic outlook for the sector's recovery and contribution to Zambia's economic growth. The government anticipates a boost in GDP growth to 4.8% in 2024, up from the 4.3% projection for this year, bolstered by the anticipated increase in copper production following the resolution of issues at MCM and KCM.
