In a major move within the global mining landscape, Manara Minerals, a joint venture established between Saudi Arabia’s Public Investment Fund (PIF) and Ma’aden (Saudi Arabian Mining Co), is on the verge of acquiring a substantial stake in First Quantum Minerals’ Zambian copper and nickel assets. Reports from Reuters, citing trusted sources, indicate that the deal could involve a 15% to 20% ownership in First Quantum’s operations, valued between a hefty $1.5 billion and $2 billion.
This potential transaction would encompass First Quantum’s key assets in Zambia, including the renowned Kansanshi and Sentinel copper mines, alongside the Enterprise nickel mine. The acquisition aligns seamlessly with Manara’s recent aggressive investment strategy in the mining sector. Notably, Manara has already pledged $1 billion to Barrick Gold’s Reko Diq project in Pakistan and committed a staggering $2.5 billion to Brazilian mining giant Vale.
For First Quantum, this deal presents an opportunity to alleviate its financial burdens. The company has been grappling with debt management challenges, particularly following the closure of its flagship Cobre Panama mine by the Panamanian government in December 2023. This closure resulted in a significant revenue loss for First Quantum, prompting the company to explore restructuring options, including asset sales and a $1 billion share offering.
Zambia, renowned for its substantial copper reserves, holds considerable promise for mining investors. Copper, a critical component in the transition to green energy, has fueled increasing interest in the country’s mining sector. This year, B, a startup backed by prominent figures like Bill Gates and Jeff Bezos, announced the discovery of a massive copper deposit at the Mingomba site in Zambia, marking one of the largest such finds in the country’s history.
However, despite its potential, Zambia’s mining sector faces a number of significant challenges. Infrastructure remains a critical concern, with underdeveloped road and rail networks hindering material transport and hindering efficient operations. Moreover, the country’s power supply has been a persistent issue. Zambia relies heavily on hydropower, accounting for 80% of its electricity generation. However, recurrent droughts and fluctuations in rainfall have led to frequent power outages, disrupting mining operations and posing a considerable risk for investors.
To mitigate the impact of power shortages, First Quantum and other mining companies have resorted to importing electricity from South Africa’s Eskom, a temporary solution that underlines the urgency of addressing Zambia’s energy infrastructure challenges. The mining sector, which generates as much as 70% of Zambia’s exports and consumes nearly half of the national power demand, is central to the country’s economic growth. Achieving the ambitious goal of boosting copper production to 1 million tons by 2026 will require significant investments in both infrastructure and reliable energy sources.