Glencore seals $1.5bn deal to offload Mopani Copper Mines

Glencore has agreed to sell Mopani Copper Mines to the Zambian government in a $1.5bn deal, it was announced on Tuesday.

The blue chip miner and commodity trader, which is listed in London and headquartered in Switzerland, said that its subsidiary, Carlisa Investments, has struck the deal with ZCCM Investments, which already has a 10% interest in Mopani. ZCCM is the Zambian government’s mining investment fund.

The sale price is $1, but the deal includes transaction debt of $1.5bn, which will remain owed by Mopani to Glencore group creditors following completion.

Glencore, which holds 81.2% of the shares in Carlisa, said that the deal was being funded by borrowings from Carlisa "and other members of the Glencore group".

Mopani produced 51,275 tonnes of copper in 2019, compared to 119,000t in 2018. According to Reuters, that accounted for 13.9% of Glencore’s African copper output and 3.7% of its overall copper output.

Until the transaction debt is repaid in full, Glencore will retain offtake rights of Mopani’s copper production.

In a note published last week, addressing speculation that a deal was imminent, SP Angel said: "Glencore has used Mopani as a swing producer, cutting production and laying off thousands of staff whenever copper prices saw a sustained low.

"While the mines are high cost, the Zambia government is quite understandably upset at having to look after staff who are hired and laid off in this way. The production cuts also reduced royalty tax payments to Zambia."

Last April, Glencore’s plans to put Mopani on care and maintenance - prompted by falling copper prices and the Covid-19 pandemic - saw the Zambian government threaten to revoke the firm’s licence.

As at 0845 GMT, shares in Glencore were ahead nearly 2% at 280.95p.