Sibanye Stillwater Sees Opportunity in Mopani Copper Mines Investment
Sibanye Stillwater, a contender among investors vying to acquire Mopani Copper Mines, has emphasized that the required funds for expanding production and ensuring profitable operation of the Zambian assets are not exorbitant.
The South African precious metals producer, headquartered in Johannesburg, has secured a place on the shortlist of potential buyers for the copper mines owned by a Zambian government subsidiary.
The future owner of Mopani is expected to make substantial investments aimed at increasing copper production to approximately 200,000 tons per year by 2027.
According to Neal Froneman, CEO of the South African platinum mining giant, Sibanye’s internal assessments during the due diligence process at Mopani suggest that an investment of about $1 billion over a period of four to five years is needed.
Froneman explained in an interview with Reuters that although this may initially seem like a substantial figure, it translates to an annual investment of approximately $200 million over five years.
He emphasized that this investment is not overly burdensome but rather a strategic move to benefit all stakeholders involved.
In 2021, Zambia’s state-owned company, ZCCM, assumed control of Mopani from Glencore in a deal funded by debt, with a payment of $1.5 billion. Since then, ZCCM has been actively seeking a new investor to take over the Mopani assets.
Initially, the government had stated that the sale of the mines, managed by Rothschild & Co, would conclude by July. However, the process is still ongoing, with Sibanye engaging with the government through the ZCCM, as confirmed by Froneman.
While Sibanye Stillwater is pursuing an expansion in battery metals, including assets in Europe and the US, along with its bid for Mopani, analysts at RMB Morgan Stanley have expressed concerns about potential financial pressures and future dividend payouts for the company. Additionally, Sibanye is working to revitalize its palladium mines in the US, which were impacted by flooding last year.
Froneman assured that the company would not undertake undue risks, emphasizing that they would only pursue opportunities that are financially viable.
He stated, “This perception that’s created that M&A is high risk, but we have always said if there is no cash, there is no way of funding and we don’t do it.”
As Sibanye Stillwater navigates its expansion endeavors, the potential acquisition of Mopani Copper Mines presents an intriguing opportunity in the global mining landscape.
