Zambia expects to find new Mopani investor by year-end

LUSAKA • Zambia’s mining investment arm ZCCM-IH said it expects to find a new investor for Mopani Copper Mines by the end of the year, as the International Monetary Fund looks into Zambia’s deal with Glencore, Mopani’s majority stakeholder.

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

ZCCM-IH and government agency IDC say the debt, owed to Carlisa Investments Corp, a British Virgin Islands-based company controlled by Glencore, is guaranteed by Mopani, not by the government, and is therefore not part of Zambia’s sovereign debt.

But analysts say the Mopani deal could compromise Zambia’s drive for debt sustainability required as part of any support from the IMF.

“The Fund is working on understanding the details of the transaction,” the IMF told Reuters, adding that it was not consulted about the deal.

Zambia’s IDC, charged with promoting industry, holds 60 per cent of ZCCMIH while the ministry of finance has a 17 per cent stake and the National Pension Scheme Authority holds 15 per cent.

An external investor in Mopani would help ZCCMIH pay off its debt to Carlisa, and is expected to fund expansion projects to boost annual copper output from a little more than 34,000 tonnes to 150,000 tonnes.

“We expect a strategic equity partner will be identified before the end of 2021,” the IDC told Reuters. ZCCMIH chief executive Mabvuto Chipata said he agreed with that target.

The investor will be expected to take a stake in Mopani and complete expansion projects at a cost of US$300 million, mines minister Richard Musukwa said on Tuesday, adding that companies from Britain, Canada, China, Qatar, South Africa, and Turkey have shown an interest.

As part of President Edgar Lungu's policy of greater state control over mines, the stake on offer will not be as high as the 90 per cent held by Glencore and First Quantum Minerals through Carlisa. Glencore holds 81.2 per cent of Carlisa, with Toronto-based First Quantum Minerals holding the remaining 18.8 per cent of Carlisa.

The minister did not specify how large a stake was on the table, but private companies will typically not want to be the minority shareholder in a state-owned entity.

WALDO SWIEGERS / BLOOMBERG FILES Analysts say the Mopani deal could compromise Zambia's drive for debt sustainability required as part of any support from the International Monetary Fund.