Friday, June 14, 2024

Sibanye brings in Chinese partner for Mopani bid

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South Africa’s Sibanye Stillwater plans to bring in a Chinese investor to form a partnership if it wins its bid to buy Mopani Copper Mines, its Chief Executive Neal Froneman told Reuters.

The Johannesburg-based precious metals producer is on the shortlist of potential buyers for the copper mines owned by a unit of the Zambian government.

The government had expected to have chosen the winning bidder by the end of July.

“We are bringing in a partner we’ve already identified and are working with, but we didn’t want to complicate the transaction by having two buyers negotiate with the government,” Froneman said, without naming the investor or detailing the terms of the possible investment.

The Chinese company has a presence in copper mining and would be joining Sibanye as an investment partner, Froneman said.

“We will bring in the partner as soon as we’ve been successful and concluded the negotiations,” he added.

Sibanye is competing with China’s Zijin Mining Group in the bid.

The South African mining veteran, famed for his dealmaking, has grown Sibanye, spun out of some of Gold Fields’ South African mines, into a diversified producer with platinum, lithium and nickel assets in Southern Africa, Europe and the U.S.

The CEO wants new assets as output from South African gold and platinum mines has been reduced by electricity blackouts and rising crime.

Sibanye earlier reported a 37% slump in first-half profit to 7.8 billion rand ($421 million) due to operational challenges and lower metal prices, sending its shares down more than 11%.

Platinum and palladium output at its Stillwater operations in the U.S., that were hit by flooding, dropped by 11%.

The Chinese investor could help derisk the investment at Mopani, Froneman said.

“They are an investment partner but technically they understand the copper business and smelting, so it’s managing risk,” he said.

Switzerland-based commodities group Glencore (GLEN.L) sold a 73% stake in Mopani to ZCCM in 2021 for $1.5 billion in a deal funded by debt, but retained offtake rights of Mopani’s copper production until the debt had been repaid in full.

The winner of Mopani’s assets in a process that’s being managed by Rothschild & Co would likely be known in about three weeks, the CEO said.

The Mopani assets require significant investment but spending would be spread over a number of years, Froneman said.

“We prefer working with partners and prefer earning-in so don’t factor into your thinking a large capital outlay for Mopani,” he added. ($1 = 18.5332 rand)

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