* Glencore to retain Mopani output buying rights until debt
repaid
* Zambia to seek new investor to finance Mopani expansion
* Expects to repay loan in 10-17 years depending on copper
prices
(Adds detail, context, analyst comment)
By Chris Mfula
LUSAKA, Jan 19 (Reuters) - Zambia's state mining investment
arm ZCCM-IH has agreed to buy Glencore's majority stake
in Mopani Copper Mines in a $1.5 billion deal funded by debt and
will seek a new investor, the government said on Tuesday.
The sale follows Glencore's attempt to suspend operations at
Mopani last year because of low copper prices and COVID-19
disruptions, prompting a government threat to revoke the
company's mining licences.
Zambia defaulted on a debt payment in November, becoming
Africa's first pandemic-era sovereign default, but will take on
more debt to finance the Mopani deal.
The takeover coincides with Zambia's preparations for
elections in August, with President Edgar Lungu courting voters
in the copper belt. More than 15,000 workers would have lost
their jobs if the mine was closed, Mines Minister Richard
Musukwa said.
Glencore said that ZCCM-IH will borrow the $1.5 billion from
Carlisa Investments Corp, a British Virgin Islands-based company
through which Glencore holds its stake, and other unspecified
members of the Glencore group.
Under the deal, ZCCM-IH will acquire the remaining 90% of
Mopani from Carlisa, giving it full control of the company for
an indicative $1.
Glencore will retain buying rights for Mopani's copper
output until the transaction debt has been repaid. ZCCM-IH will
repay the loan principal by giving Glencore creditors 3% of
Mopani's gross revenue from 2021-2023 and 10-17.5% of Mopani's
gross revenue from then on.
ZCCM-IH will also owe quarterly interest of LIBOR plus 3%.
At a ceremony in Lusaka, Musukwa said ZCCM-IH will repay the
loan in 10-17 years depending on copper prices, which
are currently near their highest in eight years at about $8,000
a tonne.
Asked how Zambia can afford to take on more debt, a mines
ministry official said: "It's not sitting on the ministry of
finance. The company is able to pay on its own."
NEW INVESTOR
Musukwa said the country will try to attract a new investor
in Mopani, adding that companies from Britain, Canada, China,
South Africa, Turkey and Qatar have expressed interest. ZCCM-IH
needs about $300 million to complete expansion projects started
by Glencore, he added.
"Zambia is not the easiest place to do business at the
moment and that has probably stymied a lot of investor
interest," said Liberum mining analyst Ben Davis.
"At these commodity prices, all assets are good assets, but
it hasn't been that great for Glencore over the past few years."
Mopani produced 34,479 tonnes of copper last year, up 14.6%
from 2019, and the expansion projects will boost output beyond
150,000 tonnes a year, Musukwa said without specifying a
timeline.
Glencore said it holds 73% of Mopani through an 81.2% stake
in Carlisa. First Quantum Minerals, which previously
held 16.9% of Mopani, did not immediately respond to a request
for comment.
(Reporting by Chris Mfula in Lusaka
Additional reporting by Zandi Shabalala in London
Writing by Helen Reid in Johannesburg
Editing by Susan Fenton and David Goodman)
Glencore (GLEN)
