MAPUTO – First Quantum Minerals has offered to buy the Zambian government’s 20% stake in Africa’s biggest copper mine for as much as $700-million, according to two people familiar with the transaction.
Vancouver-based First Quantum already owns 80% of the Kansanshi mine in Zambia’s North-Western Province, while State-owned ZCCM Investments Holdings holds the rest. The proposal, which was submitted last year, includes $300-million to $400-million in cash, and an equal amount in special royalties, over more than ten years, said the people, who asked not to be identified because they’re not authorized to comment.
First Quantum spokesman John Gladston declined to comment. Amos Chanda, Zambian President Edgar Lungu’s spokesman, didn’t immediately respond to a call and message seeking comment, and neither did a spokeswoman for ZCCM-IH.
The deal would also include ZCCM-IH dropping a $1.4-billion legal claim against First Quantum over a loan the company received from Kansanshi, the people said. The government is still considering the proposal, according to one of the people.
First Quantum and the government have been at loggerheads over other issues too. The country’s revenue authority handed it a $7.9-billion tax bill last year, while an increase in royalties this year prompted First Quantum to announce plans to fire 2 500 workers. The company has since backtracked on the proposal.
Kansanshi is First Quantum’s biggest mine, and accounted for more than half the company’s revenue in 2017. The Canadian miner’s shares have fallen 18% in the past year, valuing the company at C$10-billion.