ANGLO American is returning to full-scale exploration for copper in Zambia after signing the provisional JV agreement it struck with London-listed junior Arc Minerals in May last year.
In terms of the deal Anglo will own up to 70% of the JV company in return for the investment of up to $88.5m including up to $14.5m in cash. Arc – through its subsidiary Unico – will retain a meaningful 30% stake in any exploration discovery made by the joint venture.
According to John Meyer – analyst at London broking and research firm SP Angel – “the historic agreement marks the return and restoration of relations between Anglo American and the Zambian government. The settlement is a meaningful event for both Zambia and Anglo with both parties working to ensure mutual respect and co-operation.”
Meyer added, “Anglo appear to have a definite plan for development of copper to the west of Zambia inspired by Dave Wood, the discovery manager for Anglo in Zambia.
“The sheer scale of the investment, as indicated in the JV agreement, should enable Anglo to fully explore Arc’s large and highly prospective package of licences in the west of Zambia.
These are in the Domes region of the Zambian Copperbelt which supports the giant Kamoa, Sentinel, Lumwana and Kolwezi copper mines. Arc claims two significant early discoveries at Cheyeza East and Muswema North.
“We understand all parties want to finalise the transaction as soon as possible and for drilling to begin at the start of the imminent dry season.”
Anglo’s move is taking place against widespread predictions of a looming supply crunch in copper which is a metal essential to the energy transition with huge amounts needed for the construction of electric vehicles and in renewable energy equipment such as wind turbines.
Meyer commented, “we can see other majors following Anglo American into Zambia and other highly prospective regions as they ramp up exploration to discover the next generation of copper and nickel mines. While automotive manufacturers struggle with efforts to thrift valuable commodities the world still looks to be a very long way short of the metal tonnages required to meet the demands of the EV revolution.”
Arc executive chairman Nick von Schrinding said the deal was a major turning point for Arc Minerals and commented, “Upon closing this will see the recommencing of the exploration campaign by the Joint Venture under the management of Anglo American whom we are delighted to be partners with going forward.”
This will be Anglo American’s third venture into the Zambian copper industry. The group’s original mines were nationalised in the 1960’s after the country became independent under former President Kenneth Kaunda.
Anglo returned in the 1990’s after Kaunda left office to help revitalise the country’s collapsed copper sector under a new government more interested in foreign investment. The group then pulled out again when subsequent governments proved to be more hard-line in attitude to the country’s mining business.
