Chinese bank backs two bidders for Khoemacau
China Development Bank (CDB), a stateowned mega-financier, has reportedly shown interest in providing finance for the Chinese companies that are in the race to buy the Khoemacau Copper Mine, BusinessWeek has established.
Companies shortlisted for the acquisition of the mine include the Australian-based Citic Pacific Mining Company, MMG, Exxaro, Endeavour Mining, Impala Platinum and Zijin Mining. MMG and Zijin Mining have major Chinese equity ownership. This week, sources familiar with the discussions about the potential deal said the latest developments might add weight to the Chinese bids. “This is an interesting development because the Chinese have of lately been buying mines in Africa and it would not be a surprise if they fight their way to acquire Khoemacau Mine,” an insider told BusinessWeek. “It seems the two
Chinese companies might even consider partnering on this mine.
“We will have to wait and see how everything unfolds.” CDB is one of three state-owned policy banks in China and is responsible for raising funds for large-scale infrastructure projects.
BusinessWeek is informed that next week, the six shortlisted companies will start submitting their bids for Khoemacau with a final decision expected to be known by mid-October. Other players close to the latest developments told BusinessWeek the Chinese move was not “the best” as it could lead to the Oriental giant further controlling the copper market, a mineral that is key to the global energy transition. “Currently, Khoemacau has been exporting their copper silver concentrate to China. Imagine if they now own everything from the mining to the selling stage,” the insiders said.
Global demand for copper is expected to exceed supply in the medium to long term with leading research consultancy, Wood Mackenzie, projecting significant deficits by the beginning of the next decade. Khoemacau is estimated to be worth about $1.5 billion. The mine was built at $412 million after the company raised $650 million in project financing. Khoemacau is majority-owned by Cupid Canyon LP, with funds advised by Global Natural Resources Investments (GNRI) and by the Resources Capital Fund VII LP.
GNRI was formed from a 2015 management buyout of Barclays Plc’s private equity unit and according to Bloomberg; the investment group has been considering options for Khoemacau for at least a year. Currently, the mine is finalising plans for a $700 million expansion of its operations, to double its production to 130,000 tonnes by 2026. At that level, Botswana would be within the top 30 copper producers in the world.