What you need to know about ZCCM buying back Mopani:
The broke PF Regime has only paid one US Dollar ($1) or K21 upfront for the purchase of Mopani mine.
Zambia now owes Glencore $1.5 billion of debt because it has only paid $1. This means that Zambian’s external debt has gone up by $1.5 billion
Glencore will retain Mopani offtake rights until debt repaid. What this means is that ZCCM-IH will be required to sale all the minerals to Glencore and not to any other buyer. By extension, it means Glencore will decide at how much it will be buying the minerals.
Ba PF nimasilu zoona.
According to Bloomberg news, Glencore Plc has agreed to sell its stake in Mopani Copper Mines Plc to the Zambian government for $1.5 billion, but will get just $1 upfront.
Glencore has been in talks with the state about Mopani since last year after the two clashed on the future of the mine, which has been unprofitable for years. Despite the challenges, the operations are a vital employer for Zambia,
Glencore said Tuesday it will receive $1 for its share of the 90% holding it owns with Vancouver-based First Quantum Minerals Ltd. There has been speculation on how Zambia would pay for the asset after it became the first African country to default on its debt since the onset of the coronavirus pandemic. Zambia’s state-owned ZCCM Investments Holdings Plc already owned 10% of Mopani.
Once the deal is complete, Mopani will owe its previous owners $1.5 billion. That will be repaid from sales and profits going forward. Glencore, the world’s biggest commodity trader, will retain offtake rights for Mopani’s copper production until the debt has been paid.
Mopani was once central to Glencore’s plans to turn around its African copper business that’s been dogged by problems in recent years. The company spent billions of dollars to sink new shafts, but the asset has struggled to turn a profit. Still, once fully operational, the mines should produce about 140,000 tons of copper a year, compared with just 51,000 tons in 2019.
“The move exits Glencore from a loss-making asset, reduces future capex exposure and simplifies its copper business,” said Alexander Pearce, an analyst at BMO Capital Markets.
Glencore shelved its plans to place the operations under care and maintenance last year after Zambia threatened to revoke its mining license in April. The government’s strategy is driven by a need to safeguard jobs at the site.
Mines Minister Richard Musukwa said Tuesday that the plans to shutter the mine would have led to 15,000 workers being laid off and sent home. President Edgar Lungu will be hoping that by stepping in to take ownership, he’ll win support from labor unions and workers ahead of elections later this year.