Sibanye brings in Chinese partner for bid on Zambia’s Mopani Copper Mines
Sibanye Stillwater, a South African company, intends to establish a partnership with a Chinese investor if it successfully acquires Zambia's Mopani Copper Mines. This plan was disclosed by Sibanye Stillwater's Chief Executive, Neal Froneman, in a statement to the News site Reuters.
The Johannesburg-based precious metals producer is among the top contenders to purchase the copper mines owned by a branch of the Zambian government. The government initially aimed to announce 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 stated, without naming the investor or detailing the terms of the possible investment.
The Chinese company is already involved in copper mining and is set to become an investment partner alongside Sibanye, as confirmed by Froneman."We will bring in the partner as soon as we've been successful and concluded the negotiations," he added.
The South African mining expert, known for his successful business deals, has transformed Sibanye. Originally separated from some of Gold Fields' South African mines, Sibanye has now expanded its operations to include platinum, lithium, and nickel assets in Southern Africa, Europe, and the United States, making it a diversified producer in these regions.
The CEO wants new assets as output from South African gold and platinum mines has been reduced by electricity blackouts and rising crime.
Sibanye previously announced a 37% decrease in its first-half profit, which amounted to 7.8 billion rand (equivalent to $421 million). This decline was primarily attributed to operational difficulties and a decrease in metal prices. As a result of this news, the company's shares experienced a significant decline of over 11%.
Additionally, the production of platinum and palladium at Sibanye's Stillwater facilities in the United States saw an 11% decrease. This drop in production was a direct consequence of flooding that affected the operations.
The Chinese investor could help minimise the risks of 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 explained.
In 2021, the Switzerland-based commodities group Glencore made a deal with ZCCM, selling a 73% stake in Mopani for $1.5 billion. This transaction was financed through debt. However, Glencore retained the rights to purchase Mopani's copper production until the entire debt had been fully paid off.
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, however spending would be deposited in multiple payments 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.