GLENCORE may sell its entire 73.1% stake in Zambia’s Mopani Copper Mines to the government, said Reuters citing two sources with direct knowledge of the matter.
“As of now, we are discussing a potential sale of their stake in Mopani,” said one of the sources. A Glencore spokesman declined to comment.
The buyer would be ZCCM-IH, Zambia’s state-owned mining company which has a stake in Mopani along with First Quantum Minerals, the Canadian miner.
The possibility of a sale developed after Glencore attempted to put Mopani into mothballs citing constrained operating circumstances in Zambia which were compounding the effects of a low copper price. However, the government refused to grant permission.
The two sides briefly fell out in public after mines minister, Richard Musukwa, threatened to suspend Mopani’s mining licence unless it kept the mine open. It then emerged in an article by Reuters that the two sides were in discussions Zambia buying a larger stake.
Mopani produced 51,275 tons of finished copper in 2019 including purchased materials – accounting for 13.9% of Glencore’s African copper output and 3.7% of its overall copper output, said Reuters.
Zambia and Glencore are at “cross purposes” over Mopani, Musukwa said on Tuesday when he announced ZCCM-IH aims to increase its shareholding in Mopani to 51% “… or even more”, from 10% currently.
Glencore wrote off the value of Mopani by $1.14bn in its half-year earnings report earlier this month, saying the estimated recoverable value was $704m, including tax receivables.
Mopani’s total liabilities exceeded its total assets by $2.56bn in 2019, the company reported in a financial statement, indicating “… a material uncertainty in relation to the going concern assumption”.