UAE’s IHC signals interest in Zambian copper mine

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Abu Dhabi’s International Holding Company has expressed interest in taking over a key Zambian copper mine that is up for sale, according to four people familiar with the matter.

The approach by the United Arab Emirates’ largest listed company comes as South African miner Sibanye-Stillwater is vying to take on Mopani Copper Mines, a prized but struggling state-owned asset in Africa’s second-biggest producing country, these people added.

Mopani produces the metal used in power lines, electric cars and renewable power. Two Chinese groups, Zijin Mining and Norinco, a defence company, which were initially part of the auction process for the mine, have dropped out, three of the people said.

Zijin’s departure was due to delays on the Zambian side of the process, while Norinco has had sanctions imposed on it by the US government, one of the people added.

The sale of the mine also comes amid heightening geopolitical tensions between China and the US, which is stepping up its efforts to secure strategic minerals such as copper, cobalt and graphite. In particular, Washington is placing a growing emphasis on preventing Chinese companies from tying up important supply sources in Africa.

Washington is reviewing giving $250mn of financing to help build the Angolan leg of the Lobito Corridor railway that will help the Democratic Republic of Congo and Zambia export commodities. It is also supporting jointly with the EU the launch of a pre-feasibility study to extend the line to Zambia.

Commodity trader Glencore sold its majority stake in Mopani to Zambia in 2021 in return for a government promise to repay $1.5bn of loans in exchange for future output. The underground mine is haemorrhaging cash because of operational challenges and high costs, posting pre-tax losses of $300mn last year.

Any buyer would have to fully repay Glencore the debt it is owed or continue to give the Swiss trading house supplies of metal produced in order to settle the debt.

IHC — the UAE conglomerate that has risen to a market capitalisation of $240bn in a matter of years — has made the approach via a subsidiary called IRH, two of the people said. It has promised to keep nearly full employment at the mine, whereas the Sibanye proposal would involve job cuts to turn round the facility to become profitable, two of the people said.

IHC’s interest highlights the growing clout of Middle Eastern money in the global mining industry as the region’s governments seek to diversify their economies beyond fossil fuels. Saudi Arabia made its first big foray in July into the global metals sector through a minority stake in Vale’s base metals unit.

Boosting copper production is the centrepiece of Zambian president Hakainde Hichilema’s plans to revive the economy, after a sovereign default in 2020, mismanaged nationalisations and under-investment in its mining sector under his predecessor Edgar Lungu.

He has set a target to more than triple output of the red metal from about 800,000 tonnes a year to more than 3mn by 2032.

Zambian officials are hoping production at Mopani can be lifted from slightly more than 70,000 tonnes last year to 200,000 tonnes annually. Sibanye has estimated that $1bn of investment over five years would be necessary.

Sibanye said it was continuing to engage with ZCCM Investment Holdings, the Zambia state-controlled investment vehicle that owns Mopani. The company added that it had conducted due diligence to understand what was required for the long-term sustainability of the asset.

The company is looking to diversify into battery metals and copper. On Wednesday it said that a planned restructuring of four shafts at platinum group mines in South Africa could result in more than 4,000 job losses, showing that it was not averse to making tough decisions.

ZCCM-IH, Glencore and IHC declined to comment. Zijin and Norinco did not respond to requests for comment.

Last month Lusaka returned ownership of Konkola Copper Mines, another important copper asset, to Vedanta, four years after Zambia expelled the Indian group from the operation.

Additional reporting by Simeon Kerr in Dubai