Copper Zambia: Glencore plans to sell its stake in Mopani Copper Mines to the state
Glencore could leave Zambia, handing over its copper assets to the state.
At least this is what Reuters reports, which justifies this by the country's desire to acquire a majority stake in the local subsidiary of the Swiss giant. An amicable solution could nevertheless be successful. The mining company Glencore prefers to sell all of its stake in Mopani Copper Mines, its subsidiary in the Zambian copper sector, rather than become a minority shareholder.
According to various sources relayed by Reuters, this decision follows the will of the government expressed last Tuesday, through the voice of Richard Musukwa, Minister of Mines, to increase to at least 51% its stake in the local subsidiary of the Swiss giant, against 10% currently. It must be said that tensions between Glencore and the Zambian state have revived in recent months, due in particular to the company's desire to suspend its copper mining and processing operations due to the Covid-19 pandemic.
The government then threatened to withdraw the mining permits from the company, causing the latter to back down on the subject. This back-pedaling was probably not enough for the State, which therefore wants to become the majority shareholder.
However, a sale of Mopani Copper Mines is unlikely to be successful, according to some analysts, because the Zambian state does not have the financial means to complete the operation.
Glencore's stake would be worth $ 514.6 million, according to the company, or nearly half of Zambia's foreign exchange reserves which, according to the Central Bank, stood at $ 1.43 billion at the end of June. The proposed put option could also be a means of pressure on the state, especially since the company has not yet commented on the information.
“The country's cash flow constraints point to an amicable solution. The government may have threatened expropriation in the past, but the need for the revenue generated by copper likely precludes this option, ” said Eric Humphery-Smith, Africa analyst at Verisk Maplecroft.
Cassien Tribunal Aungane, Editor
At least this is what Reuters reports, which justifies this by the country's desire to acquire a majority stake in the local subsidiary of the Swiss giant. An amicable solution could nevertheless be successful. The mining company Glencore prefers to sell all of its stake in Mopani Copper Mines, its subsidiary in the Zambian copper sector, rather than become a minority shareholder.
According to various sources relayed by Reuters, this decision follows the will of the government expressed last Tuesday, through the voice of Richard Musukwa, Minister of Mines, to increase to at least 51% its stake in the local subsidiary of the Swiss giant, against 10% currently. It must be said that tensions between Glencore and the Zambian state have revived in recent months, due in particular to the company's desire to suspend its copper mining and processing operations due to the Covid-19 pandemic.
The government then threatened to withdraw the mining permits from the company, causing the latter to back down on the subject. This back-pedaling was probably not enough for the State, which therefore wants to become the majority shareholder.
However, a sale of Mopani Copper Mines is unlikely to be successful, according to some analysts, because the Zambian state does not have the financial means to complete the operation.
Glencore's stake would be worth $ 514.6 million, according to the company, or nearly half of Zambia's foreign exchange reserves which, according to the Central Bank, stood at $ 1.43 billion at the end of June. The proposed put option could also be a means of pressure on the state, especially since the company has not yet commented on the information.
“The country's cash flow constraints point to an amicable solution. The government may have threatened expropriation in the past, but the need for the revenue generated by copper likely precludes this option, ” said Eric Humphery-Smith, Africa analyst at Verisk Maplecroft.
Cassien Tribunal Aungane, Editor
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