Manara Minerals, a joint venture between Saudi Arabia’s PIF and Ma’aden, is seeking to purchase a 15%-20% stake in First Quantum Minerals’ Zambian operations, valued at $1.5 billion to $2 billion. This follows First Quantum’s financial losses due to the shutdown of its Panama mine, highlighting Zambia’s potential as a copper producer amidst significant infrastructure and power supply challenges that threaten mining operations.
Saudi Arabia’s Manara Minerals, a collaboration between the Public Investment Fund (PIF) and Ma’aden, is reportedly in advanced negotiations to acquire a stake of 15% to 20% in First Quantum Minerals’ Zambian assets, specifically their Kansanshi and Sentinel copper mines along with the Enterprise nickel mine. Valued at between $1.5 billion and $2 billion, this transaction is part of a broader strategy by Manara to enhance its investment portfolio following significant commitments in other mining ventures, including substantial investments in Barrick Gold and Vale. This development follows the pressing financial situation of First Quantum, exacerbated by the recent governmental shutdown of its Cobre Panama operations, which has prompted the company to pursue asset sales and capital restructuring measures. Zambia, once heralded as a leading copper producer, presents a landscape of vast potential for mining operators, especially against the backdrop of the global shift towards green energy. The discovery of one of Zambia’s largest copper deposits at the Mingomba site has drawn attention from investors, yet the country’s mining sector grapples with significant infrastructural challenges. The underdeveloped road and rail networks, coupled with chronic power supply issues attributable to reliance on hydropower, hinder operational efficiency and attractiveness to foreign investment. Notably, Zambia suffers from power shortages due to droughts, compelling companies like First Quantum to undertake emergency imports of electricity to sustain their mining operations. Given that the mining industry contributes to approximately 70% of Zambia’s exports while consuming a substantial portion of the national power demand, the government’s aspirations to ramp up copper production to 1 million tons by 2026 remains a daunting challenge amidst these adversities.
The article discusses the strategic move by Saudi Arabia’s Manara Minerals to acquire a stake in First Quantum Minerals’ Zambian assets, highlighting the complexities faced by the Zambian mining sector, particularly concerning infrastructure and power supply issues. The context of this investment is placed against First Quantum’s recent struggles following significant revenue losses due to external operational challenges in Panama, necessitating asset sales as part of its capital restructuring efforts.
The prospective acquisition of Zambian assets by Manara Minerals illustrates Saudi Arabia’s increasing involvement in the mining sector, particularly in dynamic markets like Zambia, which is rich in copper resources essential for green technologies. However, significant hurdles remain, especially relating to the country’s infrastructure and energy reliability, which could impede the realization of its ambitious production targets in the mining domain.
Original Source: www.benzinga.com
