MOPANI UP FOR GRABS?
… Glencore reportedly puts entire stake in Mopani on the table in talks with Zambia
GLENCORE
has reportedly decided to sell its entire 73.1 percent stake in Mopani Copper Mines to ZCCM-IH.
This follows Government’s decision to increase its shareholding in Mopani to 51 percent or even more from the current 10 percent.
ZCCM-IH, holds 10 percent while Glencore Plc has 73.1 percent with 16.9 percent residing with First Quantum Minerals Limited.
Glencore’s plans to put Mopani on care and maintenance prompted the government to threaten in April to revoke the firm’s mining licences.
Government objected to the move as it would have thrown thousands of miners on the streets.
Mines and Minerals Development Minister, Richard Musukwa, said that Government was working closely with the trade unions to ensure that the welfare of the employees was safeguarded.
According to media reports, Glencore is looking to exit the asset entirely.
The move by ZCCM-IH to take control of Mopani is part of its strategy shift away from minority stakes and towards running mines as an operator .
Glencore’s stake in Mopani is worth $514.6 million, according to its own valuation. Mopani’s 2019 financial statement shows operating expenses of $931 million.
Glencore wrote off the value of Mopani by $1.144 billion in its half-year earnings report earlier this month, saying the estimated recoverable value was $704 million, including tax receivables.
ZCCM-IH’s cash and term deposits together amounted to K828.9 million ($43 million) by March 31, 2019, according to the latest financial statements on its website.
Mopani’s total liabilities exceeded its total assets by $2. 562 billion in 2019, the company reported in a financial statement, indicating “a material uncertainty in relation to the going concern assumption.”
Mopani produced 51, 275 tonnes of finished copper in 2019 including purchased materials - accounting for 13.9 percent of Glencore’s African copper output and 3.7 percent of its overall copper output.
Glencore, which reported a first-half loss due to the impact of the pandemic, will not reap the benefits of billions spent on expansion projects over the last three years if it sells to ZCCM-IH but investors see this as a way for the miner to cut its losses.