UAE conglomerate seeks to gatecrash China's JCHX Zambian copper deal (updated)

Ivanhoe Electric

22/03/2024 15:09

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      Abu Dhabi's IHC unit enters race for Lubambe copper mine
    

        * 
      China's JCHX already has deal in place for the copper
assets
    

  
 (Adds comment from JCHX source in paragraph 5)
    By Felix  Njini, Julian Luk and Melanie Burton
       JOHANNESBURG/LONDON/MELBOURNE, March 21 (Reuters) - A
unit of International Holding Company  IHC.AD , Abu Dhabi's most
valuable company, is interested in acquiring Zambia's Lubambe
Copper Mine, an asset that China's JCHX Mining has already
agreed to buy, three sources familiar with the details told
Reuters.
    International Resources Holding recently told EMR Capital
that it is interested in bidding for the private equity
manager's 80% stake in the Lubambe copper project, which is up
for sale, a development that may complicate a sale process
that's already underway, two of the sources said. 
    The IHC unit's interest in Lubambe, with potential to be
among Zambia's largest copper mines, comes after Shanghai-listed
JCHX  603979.SS , a mine servicing and contracting firm, entered
into a deal to buy EMR's 80% stake in Lubambe in January. 
    The sale process requires approval from the Zambian
government, which is pending and unclear at the moment, one of
the sources said. 
    A source at JCHX, who was in contact with Reuters after
publication of the article, said the company was still confident
that the deal would be closed. The source declined to be named
due to sensitivity around the matter. 
    The Zambian government owns a 20% stake in Lubambe through
state-firm ZCCM-IH  ZCCM.LZ .
    The IHC unit's interest is spurred by an aggressive push by
cash-rich oil majors United Arab Emirates and Saudi Arabia to
secure critical metal supply in Africa, as they bid to diversify
their economies and engage with energy transition.
    Middle East investors are pitted against Chinese companies
in Africa, including state backed firms, also aggressively
pursuing deals in Africa to strengthen China's grip on minerals
required to power a rapidly expanding domestic electric vehicle
manufacturing sector.    
    EMR Capital's binding deal agreed directly with JCHX
technically precludes it from entertaining any new offers, one
of the sources said. Still, EMR is aware that IRH is interested
in buying the assets and that the UAE firm has officially
informed the Zambian government and ZCCM-IH of its interest, two
sources said.
    While its interest is now widely known within the Zambian
government circles, the UAE firm hasn't presented a formal offer
to EMR on the Lubambe stake, one source said.
    EMR declined to comment. IRH and IHC didn't immediately
respond to emailed questions.    
    IRH has gatecrashed once before. It staged a last minute
buyout of a 51% stake in Zambia's Mopani Copper Mines last
month, its first mining deal in Africa's second-largest producer
of the metal that is key to products from power lines and
industrial machinery to electric vehicles.    
    The Abu Dhabi firm became the Zambian government's preferred
investor for Mopani mines ahead of Sibanye Stillwater  SSWJ.J 
and China's Zijin Mining Group  601899.SS , which had been short
listed for the assets after a protracted selection process.
        
    CASHING OUT
    EMR, which has owned the Lubambe mine since 2017, wants to
exit the project as its funds mature, after COVID delayed its
development, the sources said. It also sold a 51% stake in
adjacent Mingomba copper project for a sizeable amount to
California-based start up KoBold Metals. EMR still holds a 28%
stake Mingomba, alongside Zambia's ZCCM.
    Lubambe, previously owned by African Rainbow Minerals
 ARIJ.J  and Vale S.A.  VALE3.SA , produced about 15,000 tons of
copper last year but needs to raise output to about 2,500 tons a
month to become sustainable, it says on its website.
   JCHX in January said it proposed to pay $1 for EMR's 80%
stake, and another $1 to take over the project's $857 million
debt. 
   Zambia's ministry of mines did not immediately respond to
emailed questions.

 (Reporting by Felix  Njini, Julian Luk, Clara Denina, Melanie
Burton; Additional reporting by Chris Mfula, Hadeel Al Sayegh;
Editing by Veronica Brown and David Evans)
 ((Felix.Njini@thomsonreuters.com; Reuters Messaging:
felix.njini@thomsonreuters.com))