State mining investment vehicle in Africa’s red metal hotspot Zambia, ZCCM-IH Plc has engaged Rothschild & Co., South Africa (Pty) Ltd a global financial services group for the strategic review of Mopani Copper Mines Plc for its sustainability and continued development. This was contained in a stock exchange news announcement on June 15 of 2022.
This development comes in the wake of Mopani’s plethora of needs ranging from working capital financing of circa $300 million after Glencore Corporation offloaded its stake to the Zambian government in 2021 to general business review in readiness for potential equity partnership to realize full asset potential. ZCCM-IH is in the process of taking stock of its investments in mining entities following appointment of a new board led by Dolika Banda that has led a delegation on the Copperbelt of Africa courting investee companies as the entity strategizes to increase its shareholder value.
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Strong global decarbonization efforts have given base metals a boost with copper and other battery metals trading at record highs on the London Metal Exchange (LME) which as bellwether for economic recovery pulse. With the firm stance of revamping the mining sector taken by the red metal producer at the Cape Town indaba that left its peers in the dust, Zambia will seek to maximize its mining potential through policy improvements that will stimulate exploration investments and attract greater investment in existing mines.
Mopani has some untapped potential that requires further injection of working capital to support production to 225,000 metric tons with actualization of the synchlinorium project.
“Shareholders and the market are aware that MCM has been a landmark asset and an internationally renowned operation within the global mining landscape for decades and remains of particular importance to both the surrounding communities and the Zambian nation at large. In this regard, therefore, the review will be undertaken to provide strategic options that will ensure Mopani is operating optimally,” the SENs carried.
The strategy review is forecast to last 6 months with another half a year extension ability if need be. The Zambian government continues to take stock of its mining assets with the most recent being Konkola Copper Mines with London arbitration slated for January 2023.
The Mopani sale condition with Glencore as offtaker could be used as a potential collateralized – solution’ for the financing that the mine seeks. The strategic review will reveal the attractiveness posture of the mining asset. Analysts have cited Mopani and Konkola Copper Mines as rare opportunities for the state to maximise benefits directly through increased ownership in the assets to give the state fiscal purse a boost in the labyrinth of economies fragilities.
Zambia’s mining outlook remains positive supported by widening renewable energy and an electric car battery era as the world steps in to mitigate climate change effects.
The Kwacha Arbitrageur
