Government Takes On $1.5bn Debt To Acquire Mopani Mines

The government will contract $1.5 billion in debts in order to achieve total ownership of  Mopani Copper Mines, formerly operated by Anglo-Swiss company Glencore. 

Mines minister Richard Musukwa announced yesterday that the government would be acquiring the mine through state holding company ZCCM Investments Holdings while it searched for a new investor to replace Mopani.

ZCCM-IH previously owned 10% of shares in Mopani. It will now purchase the remaining 90% owned by Glencore for a token value of $1. However, Mopani will still owe its old owners $150 billion, which the Zambian people will be responsible for paying. 

Speaking in Lusaka, Mr Musukwa said that ‘several entities’ from Britain, Canada, China, Turkey and Qatar have already expressed interest in investing. He also added that ZCCM-IH would need a further $300 million to complete expansion projects started at Mopani by Glencore. 

The sale comes after Glencore temporarily suspended operations at Mopani last year, following a significant reduction in copper prices due to the Covid-19 pandemic. The decision angered the government, which threatened to remove the company’s mining licenses.

The state’s purchase of Mopani will doubtlessly send shockwaves through the financial markets after Zambia previously defaulted on its debts in November. The government owes in excess of $12 billion to foreign lenders, including $3bn to Chinese institutions. 

However, the government seems optimistic, with Mr Musukwa touting that Mopani currently produces over 34,000 tonnes of copper per year, with new expansions estimated to boost output to over 150,000 tonnes.