Sibanye Stillwater Mulls Chinese Investment for Mopani Copper Mines Acquisition
South Africa's Sibanye Stillwater (SSWJ.J) is considering the introduction of a Chinese investor as a strategic partner if it succeeds in its bid to acquire Zambia's Mopani Copper Mines, according to Chief Executive Neal Froneman in a statement to Reuters.
Sibanye Stillwater, a Johannesburg-based precious metals producer, is among the shortlisted potential buyers for the copper mines owned by a Zambian government subsidiary. The government had originally anticipated selecting the winning bidder by the end of July.
Froneman explained, "We are bringing in a partner we've already identified and are working with, but we didn't want to complicate the transaction by having two buyers negotiate with the government." However, he did not disclose the identity of the investor or provide specific details regarding the potential investment terms.
The Chinese company in question possesses a presence in the copper mining sector and would join forces with Sibanye as an investment partner. Froneman stated, "We will bring in the partner as soon as we've been successful and concluded the negotiations."
Sibanye is in competition with China's Zijin Mining Group for the bid.
Neal Froneman, a renowned figure in South African mining known for his dealmaking skills, has transformed Sibanye, originally spun out of some of Gold Fields' South African mines, into a diversified producer with assets spanning platinum, lithium, and nickel in Southern Africa, Europe, and the United States.
The CEO's motivation for seeking new assets is driven by declining output from South African gold and platinum mines, attributable to electricity blackouts and rising crime.
Sibanye recently reported a 37% decline in first-half profit, amounting to 7.8 billion rand ($421 million), citing operational challenges and lower metal prices as contributing factors. This announcement led to a more than 11% decrease in the company's share value.
Platinum and palladium production at Sibanye's Stillwater operations in the U.S., which were impacted by flooding, witnessed an 11% reduction.
Froneman noted that the potential Chinese investor could help mitigate investment risks associated with the Mopani acquisition. He explained, "They are an investment partner but technically they understand the copper business and smelting, so it's managing risk."
In 2021, Switzerland-based commodities group Glencore (GLEN.L) sold a 73% stake in Mopani to ZCCM for $1.5 billion in a deal funded by debt. However, Glencore retained offtake rights for Mopani's copper production until the debt was fully repaid.
The CEO expects the winner of Mopani's assets, in a process managed by Rothschild & Co, to be announced in approximately three weeks.
Regarding the investment requirements for Mopani's assets, Froneman emphasized that significant spending would be spread over several years. He stated, "We prefer working with partners and prefer earning-in, so don't factor into your thinking a large capital outlay for Mopani."
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