The global impact of the coronavirus has finally directly hit home as Zambia’s largest copper miner, First Quantum Minerals – FQM which relies on its Zambian mines for over 60% of its group global copper production, with talks being delayed for the planned minority share sell deal.
The rapid spreading of the deadly Coronavirus has sparkled concerns from markets around the world that the virus outbreak will slow demand in China, the largest consumer of most commodities, that includes copper, which is Zambia’s single largest export product.
According to Reuters, copper miner FQM which in the past has been in talks with a Chinese company about a possible sale of shares, said on Friday that discussions to sell the minority stake in its Zambian mines have stalled amid the coronavirus outbreak in China.
The Virus has temporarily derailed talks to sell a minority stake in First Quantum Minerals’ Zambian operations, company executives said. They revealed that the Virus outbreak is preventing face-to-face meetings with potential Chinese buyers, postponing a sale that’s key to the Vancouver-based First Quantum’s US$2-billion debt-reduction plan, the copper mine said during its fourth-quarter earnings call.
First Quantum President Clive Newall said the epidemic hasn’t yet materially affected First Quantum’s physical sales and that the broader market impact is being mitigated by the miner’s hedging program.
“Our hedging program, now extended through 2020, provides some protection from copper price volatility, at the same time, a strong balance sheet has made us more resilient to black swan events such as this”, Newall said.
In December, Newall disclosed that the company’s focus for the next two to three years will be cutting debt by at least $2-billion. The executives said that the sale of a minority stake in First Quantum’s Zambian operations would help achieve the debt reduction target faster but talks are unlikely to resume until the second half of the year.
Jiangxi Copper has been seen as a potential buyer. Newall said the First Quantum required the Chinese company to sign a non-disclosure agreement restricting it from buying more than 20% of First Quantum’s shares.
