LUSAKA (Reuters) – Shareholders in Zambia’s ZCCM-IH have overwhelmingly supported its acquisition of a 90% stake in Mopani Copper Mines (MCM), the state-owned mining investment firm said on Wednesday.

Glencore agreed the sale of its majority stake in Mopani to ZCCM-IH in a $1.5 billion deal, the miner and trader said in January.

The extraordinary general meeting vote on the resolution was the last condition towards the completion of the transaction and ZCCM-IH now holds 100% ownership of Mopani, ZCCM-IH said in a statement.

The deal is funded by borrowings from Carlisa Investments Corp – a British Virgin Islands-based company through which Glencore holds its stake – and other members of the Glencore group.

With increased ownership, ZCCM-IH would now be an active participant in the global industry as copper becomes a critical metal, ZCCM-IH Chief Executive Mabvuto Chipata said.

“Mopani will repay the remaining debt of $1.5 billion from its own cashflows and the repayment is expected to happen well within the remaining life of mine,” Chipata said.

Glencore said in a separate statement it would continue to retain offtake rights in respect of Mopani’s production.

ZCCM-IH has said it expects to find a new investor for Mopani by the end of the year as it looks to boost copper output from a little more than 34,000 tonnes to 150,000 tonnes.

Source : https://www.reuters.com/article/uk-mopani-copper-m-a-zccm-ih/zccm-ih-shareholders-endorse-90-acquisition-in-zambias-mopani-idUSKBN2BN1UZ

Glencore today announces that its subsidiary Carlisa Investments, in which Glencore holds 81.2% of the shares, has completed the sale to ZCCM Investments Holdings of its 90% interest in Mopani Copper Mines, located in Zambia. As previously announced, the consideration of the transaction is US$1 and transaction debt of $1.5 billion.

Glencore said it will retain offtake rights in respect of Mopani’s copper production until the transaction debt has been repaid in full.

Mopani is an integrated copper producer located in the Copperbelt of central Zambia, producing copper cathodes.

Glencore is one of the world’s largest global diversified natural resource companies. The group’s operations comprise around 150 mining and metallurgical sites and oil production assets.

Source : https://www.kitco.com/news/2021-03-31/Glencore-sold-its-stake-in-Mopani.html

Diversified miner Glencore has confirmed that its 81.2%-owned subsidiary Carlia Investments Corp has completed the the sale of its interest in Mopani Copper Mines to Zambian State-owned ZCCM Investment Holdings (ZCCM-IH).

Glencore retains offtake rights in respect of Mopani’s production.

ZCCM-IH notes in a separate statement that it is pleased that the conditions precedent to the transaction have been satisfied.

“ZCCM-IH is now the holder of 100% of the issued shares in Mopani, transforming the company from an investment company to owning and operating a multibillion-dollar mining asset in Zambia. The board looks forward to providing shareholders with further updates on Mopani in the coming months,” it states.

ZCCM-IH shareholders overwhelmingly (99.99%) nod the acquisition of 90% shares in mopani copper mines Plc from clarisa representing Glencore and FQM.

The Transaction was subjected to Shareholders’ approval during an Extraordinary General Meeting held yesterday virtually.

ZCCM-IH is now officially 100% owner of Mopani Copper Mines Plc, a move that is in line with the company’s new strategic plan 2020 – 2026.

Source : https://copperbeltkatangamining.com/glencore-confirms-completion-of-mopani-stake-sale/

Government has secured legal services for over 2,500 MOPANI Copper Mines employees who had sued Stanbic Bank for unilaterally increasing interest rates on their personal loans.

Mines Minister Richard Musukwa says government through ZCCM- IH has hired a legal Counsel to represent the aggrieved Mopani Copper Miners in order to assert their rights against Stanbic Bank.

Mr. Musukwa says government has received numerous complaints from the Mine workers whose initial case was dismissed by the Kitwe High Court after they failed to raise funds to pay the Lawyer.

He says government has secured legal services for the Mopani Miners in order to understand the problem and protect their interests.

Mr. Musukwa has told ZNBC News on telephone that government has a duty to ensure workers at Mopani Copper Mine are not short-changed in any transaction they venture.

And Mine Workers Union of Zambia President Joseph Chewe said the gesture by government is a relief to the miners who have been paying Stanbic Bank over the last seven years.

Mr. Chewe said Mopani workers will be assured of more money in their pockets once the loans are scrapped off their pay slips.

Mopani workers have been challenging Stanbic Bank for increasing their interest rates from 15 to 40 percent.

Source: https://www.znbc.co.zm/news/gvt-rescues-mopani-employees/

MOPANI Copper Mines Plc has no plans to make any employee redundant once ZCCM-IH takes full ownership from March 31, 2021, says acting chief executive officer Charles Sakanya.

And Sakanya has insisted that ZCCM-IH’s imminent 100 per cent ownership of Mopani is the “best deal” for Zambians because citizens will benefit more compared to the previous status quo under Glencore Plc.

Meanwhile, ZCCM-IH chief investments officer Brian Musonda has disclosed that Mopani’s enterprise value is above the US $1.5 billion debt that will be due to be repaid back to Glencore, an indication that the anticipated return on investment will outweigh the cost of purchasing the mine.

Speaking during a Radio Icengelo programme in Kitwe, Thursday, Sakanya said Mopani employees’ jobs were secure and no one would be laid off following ZCCM-IH’s imminent takeover set to be completed by the end of this month.

Mopani’s outgoing parent company, Glencore, is set to relinquish its majority stake in its subsidiary following the signing of an off-take agreement with ZCCM-IH by March 31.

“There are no plans to declare anyone redundant, it’s a going concern, and there’s been no plans for redundancy at all,” Sakanya said in response to a listener who asked a question on miners’ job security.

And he insisted that the transaction was the “best deal” for Zambians because citizens would benefit more compared to the previous status quo under Glencore.

He outlined that the Kitwe-based mine still had in excess of 330 million tonnes of copper ore reserves still required to be mined, signalling a long mining shelf-life.

“In terms of the reserves, we had an independent consultant looking at this as part of the transaction, and they have confirmed what we know. The resources are in excess of 255 million tonnes at Nkana, 76.6 million tonnes at Mufulira, that’s a very big mining resource. With deepening exploration, that life can be extended beyond the 25 years. This transaction is the best that has happened for Zambians. Glencore started off by trying to put the mine on care and maintenance, and government took the opportunity to increase their shareholding and the plan they gave Glencore was accepted by Glencore,” Sakanya said.

“So, there are people worrying about: ‘what’s going to happen? What about the ownership, benefit to Zambia?’ I think this is where we need the support of everyone because, now, Mopani Copper Mines will be 100 per cent owned by Zambians so all the benefits that will ensue will be to the benefit of Zambia whereas in the past, it was to the benefit of the shareholders who were foreign.”

He dismissed any assertion that locals were incapable of successfully running the mining company.

“Zambia has more than adequate capacity to run the mines; we’ve been running the mines for close to a 100 years. The people who run the mines, mostly, are Zambians. In terms of capacity, Zambia has more than adequate capacity to run the mines. For example, from April (2020), when Glencore the care and maintenance shutdown, Mopani has run mainly 95 per cent Zambian workforce, and this will be the twelfth month when Zambians will be running the asset so we have more than adequate capacity in terms of human resource,” he said.

Meanwhile, Musonda disclosed that Mopani’s enterprise value was actually above the US $1.5 billion debt that would be due to be repaid back to Glencore.

He was responding to persistent concerns from various stakeholders about the debt being more than the actual value of Mopani, widely reported at an estimated US $750 million.

“First and foremost, this debt has always been on the books of Mopani so ZCCM-IH is not bringing cash of US $1.5 billion to buy the asset. In comparison to the value being referred to, there’s a very big difference between finance and accounting; when accountants are preparing statements, they go by a number of rules provided, according to the International Financial Reporting Standards (IFRS). So, the US $750 million being referred to, is a number sitting on the books of Mopani, according to the requirements of the accounting standards, so it has nothing to do with the actual value. This is an asset that we are comfortable with; we know everything; we have been part and parcel of the board; we know the value we are going to generate. And when you look at the enterprise value, it is way over and above the US $1.5 billion debt that it is going to carry,” he explained.

“There are also a lot of assets that have been invested in at Mopani whose value is way over and above the US $1.5 billion under discussion. So, to put in simple terms: ZCCM-IH is not paying an amount of US $1.5 billion; Mopani is just going to continue servicing the debt, which it has always carried.”

He also outlined that the State-controlled mining investment firm will not need to raise capital outside Zambia to run the mine as there were sufficient resources locally to manage the asset.

“When we were doing a detailed analysis, which was done, and also, this is the reason we accepted the value of the debt of US $1.5 billion because we know that this is sustainable. Also, we don’t need to look for money from outside. However, in case there’s need, it is possible that we can raise funds from the market. But from the interactions that we’ve been having with management, we don’t need to go to the market and raise funds for Mopani, it is a very good asset,” said Musonda.

In line with one of the pillars of its new strategic plan for 2020-2026 of increasing stakes in its underlying mining assets, ZCCM-IH is set to acquire 90 per cent of the issued shares of Mopani Copper Mines from Carlisa Investment Corp as represented by Glencore.

The acquisition will result in ZCCM-IH taking full ownership of Mopani.
The transaction is scheduled to be fully consummated by March 31, 2021, after the ZCCM-IH Extraordinary Annual General Meeting on March 30 in which ZCCM-IH shareholders will vote on the unprecedented transaction.

On January 19, 2021, the Zambian government, through ZCCM-Investment Holdings acquired 90 per cent shares in Mopani, adding to its already existing 10 per cent shareholding in the company.
The signed off-take arrangement deal is priced at US $1.5 billion, which will be financed through a loan to be serviced from Mopani’s future copper sales.

Government now has 100 per cent ownership of Mopani, a move, which, however, received mixed reaction, with more stakeholders voicing serious concerns as to the commercial viability and economic benefits government would accrue on behalf of taxpayers in the off-take arrangement deal negotiated with Mopani’s outgoing parent company, Glencore, the Swiss-based commodities and minerals trader.

Source : https://diggers.news/business/2021/03/22/no-job-losses-once-we-take-over-mopani-zccm-ih/

In the era of ‘irrational’ economics, astute investors must keep an eye on the happenings in the macro environment to make sound investments. Although not a traditional risk associated with happenings in the macro, the global shutdown that Covid 19 caused meant that commodities would only see a northward trajectory when the world opened up.

Copper has experienced a bullish run that has seen it rise to levels last seen over 8 years ago. According to an article published on CNBC early this year, “The demand for copper has been on the rise and is expected to go further up with top copper consumer China getting back to business after a long holiday and optimism of a stronger global economic recovery in view of COVID-19 vaccine roll-outs”.

Therefore, this means that investors who have been keeping a close eye on these developments and are involved in transactions such as acquisitions of commodity extraction assets such as mines are destined for an unprecedented windfall.

On Tuesday 30^th March 2021, the ZCCM IH Board will host its investors at an Extra Ordinary General Meeting (EGM) to seek its shareholders’ approval for the Transaction whereby it will acquire 90% of the issued shares of Mopani Copper Mines Plc (“Mopani”) (being all of the issued shares in Mopani which it currently does not own) from Carlisa Investments Corporation (“Carlisa”).

This transaction is one of many complex transactions that ZCCM IH has structured since its establishment. The transaction is backed by its recently released strategy which will see the investment house more active in an extractive industry that is poised for a boom in this decade. The nostalgic transaction represents an opportunity for ZCCM-IH to transform from a pure investment company to owning and operating a major mining asset in Zambia.

Shareholders in ZCCM IH will have the opportunity of seeking clarity from the Board regarding some of the intricacies of the transaction. At face value, the transaction will ZCCM IH increase its shareholding implying going forward, the woes it faced as a minority shareholder of not having its voice heard will now be the loudest voice in the board room. This is critical if the investment house is going to be able to extract better value from its underlying assets and remedy some of the previous challenges it had when it was the smallest voice in the boardroom.

Shareholders will also be reminded about how the asset they are now increasing their shareholding in was capitalized. Extractive industries are capital intensive and often not financed from cashflows due to the nature of the business as well as the working capital cycle of the value chain. Historically, Mopani has been funded by shareholder loans from Carlisa and Glencore Group. As of 31 December 2020, the total value of the loan was $4.3bn, under the terms of the debt agreement, this has been amended to $1.5bn.

The $1.5bn will be amortized through a royalty payment mechanism that has been structured in such a way that the cash water fall system will ensure all creditors are paid and equity is capitalized. The revenue stream will be assured through the signing of an offtake agreement that will see Glencore purchase the product at a market price that is based on London Metal Exchange (LME) pricing. In short, the continued acceleration of Copper Prices that have now breached the $9000 per ton mark are a win for ZCCM IH.

Source: http://fizambia.com/?p=10196 

On the 30th of this month, the shareholders of Zambia’s state miner ZCCM Investments Holdings will vote on the acquisition of Mopani Copper Mines from Glencore.

Source : https://www.cnbcafrica.com/media/6240999396001/zccm-ceo-mabvuto-chipata-on-the-acquisition-of-mopani-mine/

Zambia’s mining investment arm ZCCM Investment Holdings will hold an extraordinary general meeting on March 30 for shareholders to vote on the company’s intended acquisition of Mopani Copper Mines.

ZCCM in December announced it interest in acquiring 90% of Mopani’s issued shares from Carlisa Investment Corporation, as represented by its majority owner international miner Glencore.

Carlisa in 2020 wanted to place Mopani on care and maintenance, which led ZCCM, which then held a 10% interest in Mopani, to intervene.

Mopani is one of the longest running and largest copper and cobalt mining operations in Zambia.

Mopani has historically been funded by shareholder loans from Carlisa and other members of the Glencore group. Pursuant to this transaction, ZCCM and Carlisa have agreed that Mopani’s $1.5-billion debt bill will be taken over by ZCCM.

Should shareholders approve the transaction, Glencore and Mopani will enter into offtake agreements, whereby Glencore will acquire up to 100% of Mopani’s production of copper cathodes and copper anode slimes materials at market rates.

Some of this production will be allocated for sale to domestic Zambian value-adding customers.

ZCCM CEO Mabvuto Chipata notes that, as the global energy transition shifts away from hydrocarbons toward renewables, and development in electric vehicles drives copper demand and prices, ZCCM is in a good position as it prepares to officially assume ownership of this asset and mine this critical metal.

The mines owned and operated by Mopani – Nkana and Mufulira – are considered key Zambian assets.

A competent persons report completed by consultancy SRK in January confirmed a total resource of 255-million tonnes at a grade of 2.03% total copper for Nkana and 76.6-million tonnes at 2.2% total copper at Mufulira.

Further development has increased the mine life by 25 years through the integration of new infrastructure, as well as the implementation of an expansion programme over five targets, and three shaft sinking projects, in addition to building a new concentrator capable of a throughput of 4.2-million tonnes a year and recoveries of 94%.

The refinery’s design capacity is 225 000 t/y of copper cathode, placing it among the largest in Africa and one of four major smelters in Zambia.

Source : https://www.miningweekly.com/article/zccm-to-garner-shareholder-approval-for-mopani-takeover-on-march-30-2021-03-10

 First Quantum Minerals FM.TO sees no risk of nationalization in Zambia following the sale last month of Mopani Copper Mines to the country’s mining investment arm ZCCM-IH, the Canadian miner’s chief operating officer, Tristan Pascall, said on Wednesday.

“We don’t see any contagion or any element or risk in that more broadly in Zambia,” he said on a call.

Zambia became Africa’s first pandemic-era sovereign default in November, but ZCCM-IH in January agreed to take on $1.5 billion in debt for Glencore’s GLEN.L Mopani stake, making it the sole owner of the mine.

ZCCM-IH ZCCM.LZ has said it expects to find a new investor for Mopani by the end of the year as it looks to boost copper output from a little more than 34,000 tonnes to 150,000 tonnes.

First Quantum, which previously held 16.9% of Mopani, operates the Kansanshi and Sentinel mines in the country.

The miner aims to resolve talks with the Zambian government over expansion of the smelter at Kansanshi before August elections, Pascall said. First Quantum wants a deal that allows it to deduct royalties from costs, he said.

He said efforts to sell minority stakes in the Zambia mines continue, but the company has to take rising copper prices into account.

“That’s the challenge for copper producers looking to embark in M&A,” he said.

Source : https://www.nasdaq.com/articles/first-quantum-sees-no-contagion-risk-in-zambia-after-mopani-deal-coo-2021-02-17

Collins CHAMA-THE Copperbelt University Students Union-COBUSU has hailed Government’s decision to acquire the majority stake in Mopani Copper Mines-MCM.
COBUSU President LAWRENCE KASONDE says the decision would NOT have come at a better time than NOW.

Mr. KASONDE was speaking during the launch of the ‘Zambia for Zambians Campaign’. He said Government has again demonstrated patriotism by ensuring that the mine is handed back to Zambians, through ZCCM-IH.

Mr. KASONDE said the newly launched organisation will engage stakeholders such as the Mine Workers Union of Zambia -MUZ, the National Union of Miners and Allied Workers-NUMAW and the Ministry of Mines over the takeover of the mine.  He said the country has a pool of competent human resource that can successfully run and manage the mine profitably.

Mr. KASONDE said there is NO need for the country to engage expatriates in fields where locals are ably qualified.
Government recently acquired ninety percent shares in Mopani Copper Mines-MCM through ZCCM-IH, a move that has been applauded by a cross section of society.

Sources : https://www.znbc.co.zm/news/cbu-students-back-govt-move-on-mines/