Tuesday, April 23, 2024

UAE conglomerate seeks intrude on China’s JCHX Zambian copper deal

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Lubambe copper mine

Lubambe Copper Mine, a notable asset in Zambia, has attracted the interest of a unit of International Holding Company (IHC.AD), Abu Dhabi’s most valuable company. Reports indicate that IHC.AD is considering acquiring Lubambe Copper Mine, a move that comes after China’s JCHX Mining had previously agreed to purchase the mine. According to three sources familiar with the details, this potential acquisition highlights the evolving dynamics within Zambia’s mining sector and underscores the growing international interest in the country’s mineral resources.

A unit of International Holding Company (IHC.AD), Abu Dhabi’s most valuable company, is interested in acquiring Zambia’s Lubambe Copper Mine, an asset that China’s JCHX Mining has already agreed to buy, three sources familiar with the details told Reuters.
International Resources Holding recently told EMR Capital that it is interested in bidding for the private equity manager’s 80% stake in the Lubambe copper project, which is up for sale, a development that may complicate a sale process that’s already underway, two of the sources said.
The IHC unit’s interest in Lubambe, with potential to be among Zambia’s largest copper mines, comes after Shanghai-listed JCHX (603979.SS), a mine servicing and contracting firm, entered into a deal to buy EMR’s 80% stake in Lubambe in January.

The sale process requires approval from the Zambian government, which is pending and unclear at the moment, one of the sources said.

A source at JCHX, who was in contact with Reuters after publication of the article, said the company was still confident that the deal would be closed. The source declined to be named due to sensitivity around the matter.

The Zambian government owns a 20% stake in Lubambe through state-firm ZCCM-IH (ZCCM.LZ).
The IHC unit’s interest is spurred by an aggressive push by cash-rich oil majors United Arab Emirates and Saudi Arabia to secure critical metal supply in Africa, as they bid to diversify their economies and engage with energy transition.
Middle East investors are pitted against Chinese companies in Africa, including state backed firms, also aggressively pursuing deals in Africa to strengthen China’s grip on minerals required to power a rapidly expanding domestic electric vehicle manufacturing sector.EMR Capital’s binding deal agreed directly with JCHX technically precludes it from entertaining any new offers, one of the sources said. Still, EMR is aware that IRH is interested in buying the assets and that the UAE firm has officially informed the Zambian government and ZCCM-IH of its interest, two sources said.

While its interest is now widely known within the Zambian government circles, the UAE firm hasn’t presented a formal offer to EMR on the Lubambe stake, one source said.EMR declined to comment. IRH and IHC didn’t immediately respond to emailed questions.
IRH has gatecrashed once before. It staged a last minute buyout of a 51% stake in Zambia’s Mopani Copper Mines last month, its first mining deal in Africa’s second-largest producer of the metal that is key to products from power lines and industrial machinery to electric vehicles.

The Abu Dhabi firm became the Zambian government’s preferred investor for Mopani mines ahead of Sibanye Stillwater (SSWJ.J)and China’s Zijin Mining Group (601899.SS), which had been short listed for the assets after a protracted selection process.

CASHING OUT

EMR, which has owned the Lubambe mine since 2017, wants to exit the project as its funds mature, after COVID delayed its development, the sources said. It also sold a 51% stake in adjacent Mingomba copper project for a sizeable amount to California-based start up KoBold Metals. EMR still holds a 28% stake Mingomba, alongside Zambia’s ZCCM.

Lubambe, previously owned by African Rainbow Minerals (ARIJ.J), and Vale S.A. (VALE3.SA), produced about 15,000 tons of copper last year but needs to raise output to about 2,500 tons a month to become sustainable, it says on its website.
JCHX in January said it proposed to pay, $1 for EMR’s 80% stake, and another $1 to take over the project’s $857 million debt.
Zambia’s ministry of mines did not immediately respond to emailed questions.

Source:Reuters

5 COMMENTS

  1. Sibanye even after joining forces with Zijin Mining Group, was dribbled and shoved aside favouring IRH in the MCM deal. Lubambe Mine mustn’t be given to IRH because Zambia has not yet tested this UAE firm’s viability the way we know JCHX’s capabilities. JCHX has been contracted at Lubambe Mine for a very long time and understands the corners and breadth of operations. JCHX is better placed as it is already involved in mining at KCM, NFCA, Luanshya and Chibuluma mines. Don’t allow another unnecessary gatecrash. Don’t put all our eggs in one IRH basket. Balance it up.

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  2. The Chinese are sidelined because of geopolitical pressures.
    The government has their preferred winner in these bidding contests. But, why are mine owners recently putting their shares on sale? It was FQML first, now it is Lubambe. Note too that the sales are coming at a time when the Finance ministry gave sweeping tax relief to miners. Doesn’t this prove that such incentives are not a driving factor in making mine owners hang on to their mines?

  3. The only thing Hichilema knows is to sell. Look at what he did during privatization and his crowns praise singers will soon be slaves in these mines. Why did he sell the maize reserves? The maize his government did not even produce. All the money out of these mines will be externalized and Zambian will remain with holes in the ground languishing in poverty.

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  4. Its an opportunity to increase our shareholdings to 50% or thereabout just like the Mopani case study. Its great to see a diversified interest in our mining investments. China and India have not been so great at broader development agenda. Lets negotiate and get the oil money to help us develop rapidly. Key to all this is make sure value addition should happen locally.

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  5. Chinese and indian investors have no business in mining.

    We have given the Chinese and indians our prized mining assets in KCM and NRFC and they’ve failed

    Sell Lubambe mine to the oil brethrens.

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