Chinese Backed MMG Plans to Buy Copper Mine in Africa for $1.88 Billion

Via the Wall Street Journal, a report that MMG, which is nearly 68%-owned by state-owned China Minmetals, plans to buy the Khoemacau mine in northwest Botswana:

Chinese government-backed mining company MMG is acquiring a copper mine in southern Africa for almost $1.88 billion as it looks to bolster its stockpile of a metal that is in high demand.

MMG, which is nearly 68%-owned by state-owned China Minmetals, plans to buy the Khoemacau mine in northwest Botswana in the emerging Kalahari Copper Belt, the Hong Kong-listed company said Tuesday.

The mine is 4,040 square kilometers and hosts the 10th-largest African copper mineral resource by total contained metal, the company said. It is also one of the largest copper sedimentary systems in the world outside of the central African copper belt.

MMG’s acquisition comes amid a wave of deal-making in the global mining sector, contrasting with a lull in overall global M&A activity. Earlier this year, U.S. gold miner Newmont agreed to buy Australia’s Newcrest Mining for $17.5 billion.

The flurry of activity is being fueled by companies vying for control of commodities like copper that are likely to be in big demand amid increasing decarbonization efforts, such as the shift toward green energy and electric vehicles.

Unlike battery materials such as nickel and cobalt, copper is difficult to substitute in most applications. The metal is also used in significant quantities for EVs and wind farms.

MMG is buying the mine from lead seller Cupric Canyon Capital. This private company is majority-owned by funds managed by Global Natural Resources Investments, whose investors include sovereign-wealth funds, financial institutions, and high-net-worth individuals.

The mine, a “rare, high-grade copper producing asset,” is expected to increase the company’s scale significantly and enhance earnings diversification, MMG said.

The mine is likely generate average annual earnings before interest, tax, depreciation, and amortization of around $150 million for the next two years starting in 2024, MMG said, expecting that figure to reach approximately $600 million a year from 2029 until the end of the initial mine life of 27 years.

The company plans to fund the acquisition through shareholder loans and third-party financing.

According to the Khoemacau website, the mine’s current operations will deliver more than 155,000 tons of copper concentrate at 35%-40% copper content, which will have around 60,000 tons of copper and 1.6 million ounces of silver metal in concentrate annually.

MMG said it is planning a capital expenditure of up to $800 million toward expanding the mine.

Based in Melbourne, Australia, MMG is an operator and developer of copper, zinc and other base-metals projects across Australia, Congo, and Peru.



This entry was posted on Tuesday, November 21st, 2023 at 7:18 am and is filed under Botswana, China.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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