· Glencore and Zambian Government have been at cross purposes over Mopani Copper Mines for some time
· Glencore has a 73.1% stake in the mines while the Zambian government’s mining investment arm ZCCM-IH holds currently 10%.
Swiss-based Glencore and Zambian Government have been at cross purposes over Mopani Copper Mines for some time. Glencore has a 73.1% stake in the mines while the Zambian government’s mining investment arm ZCCM-IH holds currently 10%.
The tussle started when Glencore announced its plans to put Mopani on care and maintenance. Following the announcement, the Zambian government threatened to revoke the firm’s mining licenses in April. Zambian Mines Minister Richard Musukwa recently announced that ZCCM-IH plans to increase its shareholding in Mopani to 51% “or even more”, from the current minority share of 10%. According to media reports, Glencore has expressed its willingness to sell its entire stake in Mopani Copper Mines to ZCCM-IH rather than becoming a minority stakeholder.
The Zambian Government’s move to take control of Mopani is part of its strategy to shift away from minority stakes and towards running mines as an operator.
Mopani’s financial statement reported that its total liabilities exceeded total assets by $2.562 billion in 2019.The Mining Company produced 51,275 tonnes of finished copper in 2019 – accounting for 13.9% of Glencore’s African copper output and 3.7% of its overall copper output.
Glencore had spent billions on expansion projects over the last three years. But the pandemic adversely impacted its performance. It will not be able to reap the benefits of its investment if it sells to ZCCM-IH but the sale could offset its losses.
At the same time, Zambia lacks funds to pay for the stake and fund the mine’s running costs, sources say. Glencore’s stake in Mopani is worth $514.6 million, and operating expenses stand at $931 million.
