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ZCCM to buy Glencore’s stake in Mopani

iversified miner Glencore’s subsidiary Carlisa Investments Corporation has signed an agreement with ZCCM Investments Holding to transfer its 90% interest in Mopani Copper Mines to ZCCM for $1 and the transaction debt of $1.5-billion.

Zambian State-owned mining investment company ZCCM already holds a 10% interest in Mopani.
Glencore, as an 81.2% shareholder of Carlisa, expects regulatory and shareholder approvals to be finalised within the next three months.

Mopani had been funded by borrowings from Carlisa and other members of the Glencore group.

On completion of the transaction, $1.5-billion of debt will remain owed by Mopani to Glencore group creditors. The debt has been structured to be repaid through certain percentages of revenue and earnings before interest, taxes, depreciation and amortisation at the end of each quarter.

After completion of the sale, Glencore will retain offtake rights in respect of Mopani’s copper production until the debt has been repaid in full.

Glencore announced in April 2020 that it planned to place Mopani on care and maintenance, which sparked a backlash from the Zambian government, which said it had not given enough notice and threatened to revoke the company’s mining licences.

In May, Mopani said it would resume mining operations for 90 days but still expected to put the mine into care and maintenance.

On July 16, the company said it would appeal the Mines Ministry’s decision to reject its proposal to suspend operations.

It was reported, at the time, that the government was working closely with stakeholders, such as labour unions and suppliers, to ensure that operations continue to run smoothly during the negotiations.

Deutsche Bank Research has commented that the sale is a positive step in the Glencore story and that the transaction removes a cash draining, high cost, poor safety and high country risk asset from the portfolio.

The bank believes that the sale is in line with the company’s business simplification strategy.


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