ZCCM-IH Reaches Significant Milestone In Mopani Mine Deal
During a press briefing today, President Hakainde Hichilema announced that Zambia, through ZCCM-IH (Plc), now holds a 49% equity stake in Mopani Copper Mine, with International Resources Holding (IRH) of the United Arab Emirates possessing a 51% equity stake after an initial investment of $1.1 billion.
The finalised deal involves financing MCM’s Project Development Plan (“PDP”) by providing working capital and restructuring certain existing Glencore liabilities.
This includes a provision of a Shareholder Loan to MCM that will be used as part of the consideration to settle the original Glencore Transaction Debt of US$1.5 billion plus interest. The MOU also provides for a form of new equity capital in return for a 51% stake in MCM, which will be used for MCM’s capital projects and to stabilise the working capital position of the business.
Upon closing, ZCCM-IH’s 49% stake will allow for the retention of executive management of MCM and will be supplemented by industry experts from IRH with the relevant skills and expertise to complete MCM’s capital projects and turnaround its operational performance.
Additionally, a new Board of Directors, reflective of the revised shareholding structure, will be established. Further capital may be made available to MCM as shareholder loans if required, based on the future working capital requirements of the business.
The considerations of the agreement are as follows:
The total consideration is US$1.1 billion, which will be split between equity and debt in the following proportion:
US$620 million in new equity
US$300 million as a shareholder loan by way of novation of part of the Glencore Transaction Debt;
Up to US$100 million for the settlement of the Glencore procured letters of credit;
Up to US$80 million in shareholder loans, if required
In a related development, Shaft 28 in Luanshya has attracted a USD$1 billion investment. The mine has been non-operational for over 20 years. This investment into the mine is set to lead to over 3000 direct and indirect local jobs.
These developments mark President Hakainde Hichilema commitment to ensuring that the people of Zambia reap the benefits of the mining sector going forward. He reinstated that all these efforts are targeted to meeting the goal to increase copper production to 3 million metric tonnes per annum while boosting the national GDP.
Overall, the landmark Mopani mine deal and the substantial investment in Shaft 28 mark a transformative chapter for Zambia's economy. The infusion of $1.1 billion into Mopani Copper Mine not only secures international partnerships but also paves the way for enhanced operational efficiency and the creation of thousands of direct and indirect local jobs.
With a strengthened financial position, MCM's ambitious capital projects are set to thrive, contributing significantly to the nation's copper production target of 3 million metric tonnes annually. The positive ripple effect extends beyond Mopani, as the revival of Shaft 28 promises a rejuvenated mining sector. President Hakainde Hichilema's commitment to maximising benefits from the mining industry underscores a new era of economic growth, promising increased contributions to the national GDP and fostering a brighter economic future for the people of Zambia.