Glencore International AG, the majority shareholder of Mopani Copper Mines – Mopani has confirmed that it is in discussions with Zambian authorities regarding potential acquisition of additional shares by ZCCM IH.
Glencore Head of Communication Charles Watenphul exclusively told the Zambian Business Times – ZBT that “further to its recent disclosure that Mopani is engaging with the Zambian authorities, Glencore can confirm that it is in discussions with existing Mopani shareholder ZCCM-IH and other shareholders regarding the potential acquisition of additional shares by ZCCM-IH from Glencore. The discussions are progressing and further updates will be issued as appropriate.”
Mopani had recently had its request to put the two mines located in Kitwe and Mufulira on care and maintenance rejected for the second time by the ministry of mines. The Mine has been accused by the local Mine suppliers and contractors association of planning to relocate its procurement functions to South Africa, a move seen as a plot to further cut down on Zambian based Mine suppliers and contractors.
Analysts have questioned the true reasons behind Mopani request to place the Copper Mines on care and maintenance stating that the current reference copper prices per ton obtaining at the London Metal Exchange – LME is sufficient even for older underground Mines such as Mopani to profitable operate.
When asked what the average price of production of copper per ton is for Mopani in Zambia, Watenphul declined to disclose stating that “we would do not disclose our production costs”. The average cost of copper production per ton against the obtaining market prices is used as a gauge to determine when operations become un-sustainable and justify the tough decision of placing the operations on care and maintenance.
Glencore however stated in its half year report released on 6 August 2020 that “In Zambia, we have notified the government of our intention to place the Mopani mining operations on care and maintenance to help preserve the resource’s value and maintain optionality for when conditions improve. While our proposal has been rejected, Mopani has appealed the decision and we continue to engage with the relevant authorities to identify solutions on the way forward”.
Despite efforts to diversify the economy, copper mining remains the biggest contributor to Zambia accounting for over 70% of totals national exports. The performance of the copper mining and export industry in Zambia directly impacts on the country economic fortunes and wellbeing. The discovery of notable gold deposits in about three regions or provinces of Zambia promises to perhaps offer a real alternative to copper mining.
