Now that Africa’s second largest copper hotspot Zambia has acquired Mopani Copper Mine (MCM) after sealing a deal with Glencore Corporation and First Quantum Mining (FQM) involving 90% of combined shareholding, the Southern African nation will now seek to attract a strategic partner in running the mine. However Zambians still remain eager to know the next steps on mine operation post acquisition.
Below is an extract of the mines Ministers speech at a briefing in Lusaka the capital:
“A phase two which will see the attraction of a strategic partner that will acquire a stake in Mopani,” Musukwa said. The stake on offer will not be as high as the previous 90% held by Carlisa because as mentioned by His Excellency the President when the economic recovery plan was launched, government would like to have significant stake in selected mines and Mopani is one of them because of its great potential, he said.
Post the announcement, Zambians are asking an array of questions requiring clarification to gauge whether or not this deal was in the best interests of the country.
Post default after skipping a $42.5million coupon on a 2024 dollar bond in November 2020, Zambia seeks to leverage off mining as a sector to drive the Southern African ‘V’ shaped recovery in 2021. However some facets of society still remain weary of some of the downside risks that the mining stake reorganization especially on entities that are still in the courts with equity partners such as the case of Konkola Copper Mines. This can be viewed as sentiment dampening driver.
However its has been argued that in the event that equity partners breach license requirements and exploit citizenry the sovereign has latitude to step in to correct the status quo versus exploitation by investors of the citizenry and defending it via legal channels.
Metal prices continue to rally with copper recovering circa 76% from COVID induced March lows to trade for close to 8 year highs of $7,954 a metric ton.
The Kwacha Arbitrageur
