Manara Minerals, a partnership of Saudi Arabia’s Public Investment Fund and Ma’aden, is close to acquiring a 15% to 20% stake in First Quantum Minerals’ Zambian copper and nickel assets, valued at $1.5 to $2 billion. This transaction follows First Quantum’s struggles with revenue losses from its Cobre Panama mine shutdown, prompting exploration of asset sales and a share offering. Zambia’s mining industry, crucial for global copper supply, faces infrastructure and energy challenges that could impact foreign investments.
Saudi Arabia’s joint venture, Manara Minerals, which is formed by the Public Investment Fund (PIF) and Ma’aden (Saudi Arabian Mining Company), is on the verge of finalizing a significant investment deal to acquire a stake ranging from 15% to 20% in First Quantum Minerals’ Zambian copper and nickel properties. This potential acquisition, as reported by Reuters, is estimated to be valued between $1.5 billion and $2 billion, and it encompasses First Quantum’s Kansanshi and Sentinel copper mines, as well as the Enterprise nickel mine. The move dovetails with Manara’s recent substantial investments in the mining sector, which include a $1 billion commitment to Barrick Gold’s Reko Diq project in Pakistan and a $2.5 billion investment in Brazil’s Vale. Selling a portion of its Zambian assets is expected to assist First Quantum in managing its debt while still maintaining control over its principal operations. Following the Panama government’s mandated closure of First Quantum’s flagship Cobre Panama mine in December 2023, the company experienced a notable drop in revenue, prompting a reevaluation of its capital structure. This has led to considerations of asset sales and plans to execute a $1 billion share offering. Zambia is recognized as a key player in the global copper market, presenting considerable opportunities for investors in light of copper’s increasing significance in the green energy transition. A recent announcement from a startup funded by notable billionaires including Bill Gates and Jeff Bezos highlighted the discovery of one of the largest copper deposits in Zambia’s history at the Mingomba site. Nonetheless, the Zambian mining industry grapples with considerable obstacles, most prominently connected to its infrastructure. The country’s road and rail networks are inadequately developed, hindering the effective movement of materials, while ongoing power supply issues persist. Zambia relies heavily on hydropower for approximately 80% of its electricity, but recurrent droughts and erratic rainfall have led to frequent power shortages. For First Quantum and similar enterprises, ensuring a steady energy supply for mining operations is increasingly vital. As a response to the energy crisis, First Quantum has resorted to emergency measures such as purchasing electricity from Eskom, South Africa’s state-owned power utility. Power outages disrupt mining activities considerably, creating an uninviting environment for foreign investments. With the mining sector accounting for up to 70% of Zambia’s export revenues while consuming about half of the nation’s power, the government’s goal to elevate copper production to 1 million tons by 2026 appears to be an ambitious target.
The context of this article revolves around the critical state of Zambia’s mining sector, particularly in relation to its infrastructure challenges and the significant recent transactions involving First Quantum Minerals and Saudi Arabia’s Manara Minerals. As one of the top copper producers globally, Zambia’s mining industry plays a pivotal role in both the national economy and the international commodities market. The necessity for substantial investments, such as the one proposed by Manara Minerals, comes at a time when First Quantum seeks to restructure its capital following revenue declines from operational setbacks. Furthermore, the exploration of Zambia’s mining potential is underscored by recent discoveries and the growing importance of copper in the transition to green energy.
In conclusion, the nearing investment deal by Manara Minerals represents a pivotal development within Zambia’s mining landscape, aiming to bolster First Quantum’s financial stability amid ongoing operational hurdles. While Zambia holds significant potential for copper production, it concurrently faces substantial infrastructure challenges that must be addressed. The strategic interest of Saudi Arabia in Zambian assets could provide vital support for advancing mining capabilities and enhancing the overall sector’s attractiveness to global investors.
Original Source: www.benzinga.com
