JAPAN’S Mitsui & Co is in poll position to buy a stake in the Zambian copper mines of First Quantum Minerals, according to a report by Bloomberg News.
Mitsui submitted a higher offer for the mines than a rival proposal from Saudi Arabia’s state-backed Manara Minerals Investment, the newswire said citing people familiar with the matter. The Japanese company is considering buying a roughly 20% interest in the Sentinel and Kansanshi mines for about $2bn, Bloomberg News said.
Tokyo-based Mitsui is now seeking to negotiate terms of a deal with First Quantum.
First Quantum is being forced to sell a share in its mines in order to bolster is balance sheet. This is after the Panama shut a mine developed by First Quantum following a dispute with the government over the grant of mining licences.
Shares of First Quantum have gained about 67% in Toronto trading this year, giving it a market value of about C$15.1bn ($10.8bn). Zambia accounted for about half of First Quantum’s copper output and revenue last year, and delivered more than $450m in operating profit, said Bloomberg News.
Japanese trading companies like Mitsui have long been interested in buying minority stakes in mines to secure materials for the country’s domestic industry, said Bloomberg News. Yet in recent years they’ve faced increased competition from state-backed entities in the Middle East and China, it said.
Many in the industry had seen Manara as the most likely winner. Backed by the Saudi sovereign wealth fund, it’s spearheading the kingdom’s ambitious plan to become a major player in metals and mining, the newswire said.
