Abu Dhabi's International Resources Holding (IRH), part of International Holding Company's mining investment division, has proposed to acquire a substantial stake in Zambia's copper industry. Two knowledgeable sources revealed to Reuters that IRH has presented an offer surpassing $1 billion for 51% of Konkola Copper Mines (KCM), a venture currently under the ownership of Indian magnate Anil Agarwal's Vedanta Resources.
IRH's bid comes as it aggressively extends its copper mining footprint in Zambia, already having secured a 51% interest in Mopani Copper Mines at a value of $1.1 billion. Furthermore, IRH announced last month intentions to compete for a share in the Lubambe Copper Mine, currently held by EMR Capital and also on the market.
This acquisition drive aligns with the strategic interests of oil-wealthy nations like the UAE and Saudi Arabia to lock in essential metal supplies from Africa, positioning them in the green energy movement.
The sources indicate that the IRH proposal for KCM is preliminary and negotiations are in progress. Despite Vedanta's reluctance to relinquish a controlling interest in KCM, which it has strived to retain on its balance sheet, IRH is steadfast in its strategic ambition to amplify its role in the copper mining industry.
In response to inquiries, IRH acknowledged its strategic interests in the sector while abstaining from comments on current discussions.
Vedanta's parting with some of its 80% stake in KCM, handled by Standard Chartered, is an endeavor to rejuvenate the assets following a nearly crippling dispute with the Zambian government that began in 2019. The Zambian government, through ZCCM-IH, holds a 20% stake in KCM.
Standard Chartered's "request for proposals" aims to attract investors for a minority stake in KCM. However, IRH is only contemplating a controlling share, as KCM's requirement for substantial investment and its current unprofitability make a minor stake less appealing.
Vedanta's quest for capital, to the tune of roughly $1 billion over five years and an additional $300 million for local debts, is crucial for reinvigorating operations, especially for projects like the Konkola Deep Mining Project. While the prospect of a copper market rally might pique investor interest, concerns linger over operational challenges, such as dewatering the deep underground mines.
Vedanta's openness to both minority and majority stake sales comes as it engages with potential partners for funding necessary to resume full operations and meet its financial obligations. The negotiations with these prospective partners have reached a sensitive stage, hence details remain undisclosed.
Reclaiming control of KCM after a lengthy legal skirmish with the previous Zambian government, Vedanta is now positioned to reshape its legacy and potentially welcome new partnerships to bolster its presence in the copper-rich region.
