9.5 C
Alba Iulia
Friday, March 5, 2021

Zambia takes on $1.5 billion debt to acquire Glencore’s Mopani mine

Headlines Zambia takes on $1.5 billion debt to acquire Glencore's Mopani mine

ZCCM-IH has agreed to take over Glencore’s majority stake in Mopani Copper Mines in a $1.5 billion deal funded by debt, and will look for a new investor, Mines Minister Richard Musukwa has announced.

The sale comes after Glencore last year tried to suspend operations at Mopani due to low copper prices and COVID-19 disruptions, angering the government, which threatened to revoke the company’s mining licenses.

At a ceremony in Lusaka, Mr. Musukwa said the country will try to attract a new investor in Mopani, adding that “several entities” from Britain, Canada, China, Turkey, and Qatar have expressed interest.

Mr. Musukwa said ZCCM-IH needs about $300 million to complete expansion projects started by Glencore.

Mr Musukwa said Mopani’s current production of “over 34,000 tonnes” of copper has increased over the last year adding that the expansion projects will boost output beyond 150,000 tonnes a year.

Mr Musukwa said more than 15,000 workers would have lost their jobs if the mine was closed.

ZCCM-IH Chairman Eric Silwamba said the company would acquire 90% of Mopani from Carlisa Investments Corp, bringing ZCCM-IH full control of the company. ZCCM-IH previously held 10% of Mopani.

Glencore said today that it will receive $1 for the 90% holding it owns with Vancouver-based First Quantum Minerals Ltd.

There has been speculation on how Zambia would pay for the asset after it became the first African country to default on its debt since the onset of the coronavirus pandemic.

After the sale of its 73% stake for an indicative $1 is complete, Glencore will retain offtake rights of Mopani’s copper production until the transaction debt has been repaid in full, the company said.

Glencore said it holds 81.2% of the shares in Carlisa.

First Quantum Minerals, which previously held 16.9% of Mopani, did not immediately respond to a request for comment.

Glencore has been in talks with the state about Mopani since last year after the two clashed on the future of the mine, which has been unprofitable for years.

Zambia’s state-owned ZCCM Investments Holdings Plc already owned 10% of Mopani.

Once the deal is complete, Mopani will owe its previous owners $1.5 billion.

That will be repaid from sales and profits going forward.

*Below is the full press statement*

Glencore today announces that its subsidiary Carlisa Investments Corp. (“Carlisa”), in which Glencore holds 81.2% of the shares, has signed an agreement with ZCCM Investments Holding plc (“ZCCM”) to transfer its 90% interest in Mopani Copper Mines plc (“Mopani”) to ZCCM, the owner of the remaining 10% interest in Mopani, for US$1 and the Transaction Debt (as defined below).

Completion of the sale is conditional on receipt of certain regulatory approvals in Zambia and on the approval of the shareholders and board of directors of ZCCM, and is expected to occur within the next three months.

Mopani has been funded by borrowings from Carlisa and other members of the Glencore group. On completion, US$1.5 billion of debt (the “Transaction Debt”) will remain owed by Mopani to Glencore group creditors on the following terms:

a. interest under the Transaction Debt will be capitalised for the first three years after completion, and thereafter will be payable quarterly at LIBOR + 3% (subject to a switch to an equivalent interest rate based on SOFR); and

b. principal outstanding under the Transaction Debt will be repayable under a dual mechanism whereby:

i. 3% of gross revenue of the Mopani group from 2021-2023 (inclusive), and 10-17.5% of gross revenue of the Mopani group thereafter; and

ii. 33.3% of EBITDA less tax, changes in working capital, capital expenditure, royalty payments and interest and principal (calculated under the first mechanism) payments in respect of Transaction Debt, is at the end of each quarter required to be paid.

Repayment of principal (together with accrued interest) may additionally be required in the event of an occurrence of certain other early prepayment events, including certain change of control events in respect of Mopani.

After completion of the sale, Glencore will retain offtake rights in respect of Mopani’s copper production until the Transaction Debt has been repaid in full.

56 COMMENTS

  1. “ZCCM-IH has agreed to take over Glencore’s majority stake in Mopani Copper Mines in a $1.5 billion deal funded by debt, and will look for a new investor, Mines Minister Richard Musukwa has announced.”

    What is our objective?
    To have total control of the mine or chase Glencore?
    Why should we buy something and then look for an investor?
    We are going to borrow money and pay Glencore, but why should they have offtake rights? This can only make sense if we don’t borrow and we just start to owe Glencore the $1.5, then we give them the offtake rights.
    Zambia chabe, Mulungu abwele chabe. I think we have failed to manage ourselves.

    27
    8
  2. Good move,glencore has never been a serious investor,with the rising copper price,Zambia will benefit from this timely intervention

    6
    23
  3. Welcome move. This time round, let’s have an investor with better conditions or we let ZCCM-IH run it.

    8
    17
  4. Looking for a new investor? I thought the goal is to run the mining and refining assets through ZCCM-IH? Anyway the small print in the sale agreement is what matters. As a public limited company, ZCCM-IH are obliged to make the sale agreement public, including those who hv been negotiating and their outside advisers. Such agreements are normally couched in opaque language beyond the grasp of the ordinary person in the street.

    7
    1
  5. The challenge we have is: Who authored this agreement? How can you borrow from the one you are buying from? And this offtake rights, this is what Glencore wanted to control. They will buy our copper at a predetermined price? GRZ has not sold anything and goes against what ECL said on the copperbelt recently, that Zambians are taking control of mining resources. Elo nkongole nasho?

    10
    1
    • borrow from the one you are buying from Its like the Guptas in South Africa; they borrowed and lent back

      8
      1
  6. Just say that the Chinese are buying Glencores’ stake through the PF government.
    Why beat about the bush?

    25
    3
  7. Risky but doable…..

    The one to suffer is ZESCO, GRZ to GRZ will not pay for electricity supplied , ZESCO will have to work without the revenue from mopane….

    Without crippling electricity costs , this none should work ok.

    7
    1
  8. Very poor agreement. In effect, the Zambian government will be paying turnover tax and income tax to Glencore. Glencore has also collateralized the loan through future mined copper.

    2
    1
  9. A definition of insanity. You sell a mine for $200 million and then get a loan for $1.5 billion to buy it back.

  10. These debts will be paid by the poor Zambians through hyperinflation (high fuel price, high electricity bills, expensive food & high tuition fees for their children) & choking tax, yet they will benefit nothing from the copper looting but pollution & respiratory health complications in Mufulira

    8
    1
  11. This is an indirect sale of the mine to whomever lent them the money! The question is who released such a hefty amount of money after Zambia just defaulted on its Eurobond debt! Something does not add up here…

    7
    1
  12. The seller lends the buyer money to buy them off with a clause which binds you to sell your product only to the seller.

    3
    1
  13. Really laughable….PF stupidity indeed…how do you buy shares from the owner of the company through a loan from the same company…this is one loan that will cost billions to repay…some more billions added to our debt.

    2
    1
  14. If we are really disciplined we can run our country’s industry pretty well. Ka discipline cabe ndiye sikalipo. Forget their cash… Outsiders come with discipline and hard work, kwasila.

  15. So the mine in the meantime will be staffed to over capacity by political cadres like the way it has been done with Zambia Police and Zesco.

  16. The investor will obviously be Chinese am sure the funded the debt yaba we are in deep trouble bane please let’s vote wisely.

  17. I hope that the new investor will be a Zambian company or a group of Zambian companies.
    The question is why can’t Zambians take over the running of mines?
    I really hope that ZCCM-IH will look for the Zambian companies. And by the way why do we have to support the western countries and UN’s policies to keep Africa under developed by handing over mines to extractive multi-national companies from the west?

  18. Saulo Simpasa – Read the article properly: no money has exchanged hands. Worry about these:

    i. 3% of gross revenue of the Mopani group from 2021-2023 (inclusive), and 10-17.5% of gross revenue of the Mopani group thereafter; and
    ii. 33.3% of EBITDA less tax, changes in working capital, capital expenditure, royalty payments and interest and principal (calculated under the first mechanism) payments in respect of Transaction Debt, is at the end of each quarter required to be paid.

    Somebody needs to tell me how much will remain for Zambia after Glencore takes its share.

  19. If takes debt to buy back what was sold by hh to his imperial friends, then let it be so. We are taking back ownership of our resources. Amen.

    2
    9
  20. How much did Glencore pay when they took over the mine? Some foo1 agrees to give them $1.5 Billion after they have exhausted the ore?!!!!

  21. Whether this is a good or bad decision is premature because the small print of the sale agreement and the latest balance sheet of Mopani Mining aren’t available . But I don’t expect anything good for the country where Eric Silwamba is involved. I saw miners’ union leaders on tv expressing happiness at the deal. It’s probably premature because we don’t know Mopani’s immediate financial state and requirements.

  22. It’s a wait and see situation. Someone wants to please the immediate funders who call this country Chambia they even hide to who bail out those former Ministers who overstayed in office after dissolution of Parliament.If things come to worse for the miners whom they want to protect there jobs by failing to manage a smooth operations of the mines just think of what to expect from miners.

  23. Great move.I like this man.The problem of some Zambians can’t understand that a country can only develop when Zambians buy industries or govt run them.No where in the world u can develop with foereigners running your companies .America is like that bcoz americans owns 90% of assets.Why should u have HH to run a country with ideas of bring foreigners to take over all companies.And he thinks Zambians can’t run a company.Does that man think?I see inferiority complex in him.He won’t win.Bakopala never waste your votes to such saviour of foreigners

  24. But wht has HH said on this transaction? Nothing so far but there has been a reaction from another opposition leader Andyford Banda. He doubts the deal will benefit Zambians. Still it’s HH who takes the flack for coming from the wrong part of the country I suppose.

  25. The president had said he hope to see mines in Zambian hands, but again after doing that, musukwa is is saying they will look for an invester to do what now??

  26. BaSatanist ba Glencore naba Mopani na Kleptoh².
    It is always costly to undo what was done muma 90s.
    We had very dull Zambians trading our mines casually with kleptoh² overseeing the project.
    Glencore aliswamo kale.
    Our assets mwandi okay chilankalipa.
    Uyu chigili kleptoh² kuntu namulangulamo nelya kwikoshi awa napanshi.
    Pompwe munshibila nsala! Sha!

  27. Glencore acquired Mopani in 2000. For very little. Now, who was the president that time… Vedanta acquired KCM in 2004. For very little. Now who was the president that time… Was it HH? I don’t think so. Am not UPND by the way since am PF

  28. My worry is this:
    b. principal outstanding under the Transaction Debt will be repayable under a dual mechanism whereby:

    i. 3% of gross revenue of the Mopani group from 2021-2023 (inclusive), and 10-17.5% of gross revenue of the Mopani group thereafter; and

    ii. 33.3% of EBITDA less tax, changes in working capital, capital expenditure, royalty payments and interest and principal (calculated under the first mechanism) payments in respect of Transaction Debt, is at the end of each quarter required to be paid.

Comments are closed.

- Advertisement -
Loading...

Latest News

Forgotten Man Lazarous Kambole Advised To Make Loan Move

Kaiser Chiefs striker Lazarous Kambole has been advised to consider making a loan move away from Soweto giants in...

More Articles In This Category

- Advertisement -