Saudi Arabia’s Manara Minerals is nearing a deal to acquire a 15% to 20% stake in First Quantum Minerals’ Zambian copper and nickel assets, valued at $1.5 billion to $2 billion. This investment mirrors recent commitments by Manara and follows significant revenue loss for First Quantum after the shutdown of its Cobre Panama mine. Zambia’s mining sector holds immense copper potential but faces substantial infrastructure challenges, particularly in energy supply, which are crucial for attracting foreign investments.
Saudi Arabia’s Manara Minerals, a collaborative venture of the Public Investment Fund (PIF) and Ma’aden, is poised to finalize a significant acquisition of a stake in First Quantum Minerals’ Zambian assets valued between $1.5 billion and $2 billion. Reports from Reuters indicate that this transaction may grant Manara a 15% to 20% interest in First Quantum’s prominent Kansanshi and Sentinel copper mines, as well as in the Enterprise nickel mine. This potential investment is a part of Manara’s recent strategy, which included a notable $1 billion investment in Barrick Gold’s Reko Diq project in Pakistan and a $2.5 billion stake in Brazilian mining company Vale. First Quantum has been compelled to consider the sale of its Zambian operations to streamline debts while maintaining oversight of critical business activities. The company faced a stark revenue decline following the December 2023 closure of its flagship Cobre Panama mine, which has prompted explorations into capital restructuring, including asset divestitures and a proposed $1 billion share issuance. Zambia remains an attractive destination for mining investments, heralded for its extensive copper reserves, which play a crucial role in powering the green energy movement. Earlier this year, a newly established startup, supported by billionaires such as Bill Gates and Jeff Bezos, reported the discovery of one of Zambia’s largest copper deposits at the Mingomba site. However, the Zambian mining sector grapples with significant infrastructure deficits, particularly in transportation networks and electricity supply challenges. With approximately 80% of its electricity derived from hydropower, Zambia has faced intermittent power shortages due to droughts and variable rainfall patterns. First Quantum has resorted to emergency measures, such as importing electricity from South Africa’s Eskom, to counteract these energy disruptions. The ongoing power outages are adversely affecting mining operations and diminish Zambia’s appeal as a destination for foreign direct investment. Despite the mining sector accounting for up to 70% of the nation’s exports and consuming around half of the country’s total power output, the ambitious goal of increasing copper production to 1 million tons by 2026 appears increasingly challenging given the current conditions.
The ongoing negotiations between Saudi Arabia’s Manara Minerals and First Quantum Minerals underscore the strategic importance of Zambia’s mining sector, particularly in the context of global copper demand. Zambia’s vast copper reserves are increasingly critical due to their essential role in green technologies, especially as the world transitions toward renewable energy sources. However, potential investors face various hurdles stemming from inadequate infrastructure including transportation and power supply, which complicate operational efficiency and profitability in the region.
In conclusion, the anticipated acquisition by Manara Minerals exemplifies Saudi Arabia’s strategic expansion into Zambia, a country integral to the global copper supply chain. Despite the promising opportunities presented by Zambia’s rich mineral resources, significant infrastructural challenges remain, particularly concerning energy reliability and logistical capabilities. It is crucial for both current and future stakeholders in the Zambian mining sector to address these challenges in order to realize the full potential of the country’s mining capabilities.
Original Source: www.benzinga.com
