Rio, Saudi Bid for Stake in $450M Profit Zambian Copper Mines

Key Takeaway

• Rio Tinto and Saudi Arabia's Manara, along with Mitsui & Co. and Sumitomo Corp., eye First Quantum’s Zambian copper mines amid global demand.
• The mines, significant for their $450 million operating profit last year, highlight the scarcity of quality copper assets.
• This interest aligns with strategic shifts towards securing essential minerals for electric vehicles and renewable energy infrastructure.

Interest in Zambian Copper Mines

Rio Tinto Group and Saudi Arabia’s Manara Minerals Investment Co., along with Japanese trading houses Mitsui & Co. and Sumitomo Corp., are considering bids for a stake in First Quantum Minerals Ltd.’s Zambian copper mines. These mines, Sentinel and Kansanshi, are significant as they accounted for about half of First Quantum’s copper output and revenue last year, delivering more than $450 million in operating profit. The sale process is in its early stages, with First Quantum seeking first-round bids in the coming weeks. The interest in these assets underscores the global demand for copper, essential for electric vehicles and renewable energy infrastructure.

Global Demand Driving Interest

The soaring demand for copper, coupled with a scarcity of new mining projects and quality assets available for acquisition, has heightened interest in First Quantum’s Zambian mines. This demand is driven by the metal’s crucial role in the production of electric vehicles and renewable energy infrastructure. The central African copper belt, stretching through Zambia and the Democratic Republic of Congo, holds significant potential, yet the availability of appealing assets is limited. This scenario has led companies, including those that have previously avoided investments in Africa, to reconsider their positions.

Strategic Shifts and Diversification

The potential sale comes after First Quantum was compelled to close its flagship copper mine in Panama following public protests, prompting the company to refinance its debt through stock sales and a notes offering. The firm is exploring the divestiture of smaller mining assets as part of this strategy. For Rio Tinto, the world’s second-largest mining company, acquiring a stake would mark a shift, given its general preference for operating its mines and its historical avoidance of the central African region. Meanwhile, for Saudi Arabia, securing a stake in the Zambian mines would align with its broader strategy to diversify its economy beyond oil, following its recent investment in Vale SA’s base metals unit.

Management Quotes

• A spokesperson for Sumitomo:

  "The company continues to explore opportunities to acquire stakes in copper operations, declining to comment on specific deals."