IT is encouraging that the country will enter the New Year with matters of both Mopani Copper Mine (MCM) and Konkola Copper Mine (KCM) settled.
In what seems like too good to be true, ZCCM Investment Holdings (ZCCM-IH) has finally settled for International Resources Holding RSC Limited (IRH), the Abu Dhabi -based conglomerate, as the preferred strategic equity partner in Mopani.
The announcement was made last week thereby effective ensuring that the country starts 2024 with tangible solution at both MCM and KCM. According to a market update, IRH will invest a total of US$1.1 billion into MCM to fund the mining unit’s mining project plan which is encouraging. The US$620 million will be provided in the form of new equity capital in return for a 51 per cent stake in Mopani, which will be used for Mopani’s capital projects, and to stabilise the working capital position of the business.
Other outlines include US$400 million to go towards shareholder loan to MCM by way of novation of the Glencore debt, that will be used as part of the consideration to settle the original Glencore transaction debt of US$1.5 billion plus interest as well as Glencore’s super senior procured letters of credit.
There is also a provision that further capital may be made available to Mopani as shareholder loans, if required, based on the future working capital requirements of the business.
The other worth noting provision is ZCCM-IH’s retention of a 49 per cent equity stake in Mopani assets thereby answering to the cries of stakeholders who have been pushing for greater stake in the mining sector.
In addition, the other great news is that the executive management of Mopani will be retained and supplemented by industry experts from IRH with the relevant skills and expertise to complete Mopani’s capital projects and turnaround its operational performance.
mile in presenting a good future for the country.
Because of the low investments in KCM and Mopani has seen copper production dwindling to a 14-year low.
Mining experts have been insisting that well recapitalised Mopani and KCM have the capacity to add around 500-600,000 tonnes of copper.
It is estimated that Mopani has a rare capacity to reach around 330, 000 tonnes of copper per year with KCM capable of adding around 300, 000 tonnes of copper and more if well capitalised.
With the ambitious target of expanding copper production to an all-time high of three million tonnes of copper by 2031, a revived Mopani and KCM will play a gigantic role in reaching the target.
After unlocking KCM which Vedanta Resources is coming back to run, very soon the Indian miner will pump in money to ramp up production as the court processes to register the consensus reached with the government is shaping up.
Glencore handed over the mine in 2021 through a share buyout to the tune of US$1.5 billion debt payable between 10 to 17 years but production has suffered immensely because of lack of recapitalisation.
To resolve the ‘puzzle,’ on June 15, 2022, ZCCM-IH appointed Rothschild & Co. South Africa (Pty) Limited to assist ZCCM-IH with a strategic review of Mopani to ensure its sustainability and continued development leading to the finding of a new strategic partner.
Finally, Rothchild & Co South Africa (Pty) Limited has since concluded its works and recommended that the Abu Dhabi conglomerate is a preferred bidder.
There is no doubt the best deal, looking at many fronts such as the retention of a significant share structure of 49 per cent, the retention of top executives who have been through thick and thin trying to salvage the assets under difficult circumstances.
This current management long before developed an elaborate and bankable turnaround plan which will see copper production jump from the meagre 83, 000 tonnes to around 330, 000 tonnes per annum.
The Mopani Development Plan as they call it includes coming up with a fertiliser plant in Mufulira that will produce not less than 60,000 tonnes of copper annually which will boost agriculture production.
The other front is that the US$ 1.1 billion the Arabs will pump in will have a serious boost on production that lagged behind for more than two years.
Stakeholders have welcomed the deal with Mining Researcher James Musonda saying the injection of new capital breathes new life into the company.
“One hopes that the resulting profit that this new capital entails will improve the company’s profitability and ability to repay the Glencore debt. Equally progressive is the assurance that there would be no retrenchments,” Dr Musonda says.
Mine Workers Union of Zambia (MUZ) president Joseph Chewe describes the deal as a huge milestone.
“This is the best news we have received and the best Christmas gift.
We are happy that the issue has been brought to rest as we come to the end of the year 2023,” he says.
Mr Chewe says the deal has put to rest the uncertainties that were surrounding the mining firms and is happy that the issues raised have been taken care of in the deal.
National Union of Miners and Allied Workers (NUMAW) Saul Simujika also says the deal has been long overdue and is happy that the year is ending, clearing the minds of workers and the nation as whole.
He says the future for the mine is bright and it is more interested in securing the welfare of miners.
“The sealing of the deal will allow productivity and will put the minds of workers at ease knowing that the jobs are safe,” he says.
Mufulira District Chamber of Commerce and Industry (MDCCI) president Luckson Ndhlovu says the deal marks the revival of the Mufulira and Copperbelt economy.
“This is a Christmas gift, this deal is far much better than the Vedanta Resources deal, the Government has just sold shares and the commitment to retain the top management team is progressive,” Mr Ndhlovu states.
Going forward, he says there is a need to put emphasis on local suppliers of goods and services to get more benefits to the local economy.
One hopes that all the lingering merger and acquisition issues will be ironed out in earnest so that the asset, which is one of the most viable ‘cash cows,’ will start production and be placed on the growth trajectory.
The Abu Dhabi investor should stick to the original plan to revival the mining fortunes of the giant mining house whose lifespan ranges between 25 and 50 years.