Sibanye-Stillwater’s hot pursuit of Zambia’s Mopani Copper Mine (MCM) has derailed after Lusaka chose cash-rich Abu Dhabi’s International Resources Holding (IRH) as the strategic equity partner (SEP) for the asset, handing Neal Froneman a rare deal-making defeat.
ZCCM Investments Holdings (ZCCM-IH), the Zambia state-owned investment vehicle that owns MCM, said on Friday that it has chosen IRH as the preferred bidder for the mine, which produces the metal used in power lines, electric cars and renewable power.
IRH is a subsidiary of United Arab Emirates’ (UAE) most valuable listed company, International Holdings Company (IHC), which has a market value of about $240bn.
ZCCM-IH said the proposed transaction is key for the revitalisation of the Zambian mining industry and the Zambian economy and the continued development of the copper belt.
“This significant interest from leading global strategic investors during the SEP process, indicates the high-quality nature and strategic value of MCM, despite the short-term challenges it has been facing,” ZCCM-IH said in a statement.
“The capital investment combined with the industry experience of the IRH and MCM management teams should enable MCM to achieve its long-term potential and it to increase copper production to at least 200,000 tonnes per annum while promoting increased industrialisation on the Copperbelt and stabilising employment and local supply chains.”
IHC is chaired by a senior member of the ruling family, Sheikh Tahnoon bin Zayed al-Nahyan, who also chairs First Bank of Abu Dhabi, which Business Day reported earlier in 2023 is seeking a banking presence in SA.
Nahyan, who is also the UAE’s national security adviser and deputy ruler, was earlier in 2023 appointed as chair of the Abu Dhabi Investment Authority, the main sovereign wealth fund of Abu Dhabi, the UAE’s capital, said to manage assets north of $800bn.
Swiss-based commodity giant Glencore sold its majority stake in MCM to Zambia in 2021 on condition the Southern Africa country repay $1.5bn of loans in exchange for future output.
This means IHC will have to fully repay Glencore the debt it is owed or continue to give the company supplies of metal produced to settle the debt.
Sibanye, China’s mining house Zijin Mining and a consortium of former Glencore officials are said to be in the running for MCM, according to Reuters.
The Johannesburg-based Sibanye has publicly courted MCM since the Zambian government announced it was looking for a SEP.
Froneman said earlier in 2023 that opportunities to buy an asset such as MCM are scarce.
“These opportunities do not exclude selective expansion into Africa as part of our Africa Region strategy. We have identified that Zambia, under President [Hakainde] Hichilema’s new leadership, is transforming into an attractive jurisdiction seeking to attract mining capital under a favourable policy environment,” said Froneman.
“The intended sale of the Mopani mine is of particular interest, presenting a unique opportunity to secure meaningful production ounces of copper, a key green metal for the low carbon economy, at a favourable entry point in the commodity cycles.”
The Financial Times reported in October that IHC, a late entrant in the race, had an edge as its proposal included a promise to keep nearly full employment at the mine, whereas the Sibanye proposal would involve job cuts to turn round the facility to become profitable.
Sibanye, worth about R60bn on the JSE, did not respond to request to comment.
Froneman has been on an acquisition spree over the past decade, rarely losing out on clinching deals. In 2016. Sibanye bought Aquarius Platinum in SA, including the Mimosa joint venture with Impala Platinum in Zimbabwe.
This was followed by the acquisition of the Rustenburg operations from Anglo American Platinum.
In May 2017, Froneman splashed $2.2bn in buying US-based Stillwater Mining Company — the largest platinum group metals (PGM) transaction globally in over a decade.
Sibanye in 2018 invested in the circular economy through the initial 38.05% shareholding in DRDGold, and later increased the holding to 50.1%.
The spending spree continued in 2019, snapping up Lonmin, which comprised the Marikana PGM mining operations and associated processing and base metal and precious metal refining operations.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.