Saudi Arabia’s PIF and Ma’aden Eye Major Stake in Zambian Mining…

Saudi Arabia’s Public Investment Fund and Ma’aden are in advanced discussions to purchase a 15% to 20% stake in First Quantum Minerals’ Zambian assets, valued between $1.5 billion and $2 billion. This deal comes in light of First Quantum’s financial struggles and the potential for infrastructure improvements in Zambia’s mining sector, which faces significant challenges, particularly with power supply and transport facilities.

Saudi Arabia’s Public Investment Fund (PIF), in collaboration with Saudi Arabian Mining Company (Ma’aden), is on the verge of securing a deal to acquire a stake of 15% to 20% in First Quantum Minerals’ subsidiaries in Zambia. This transaction is projected to be valued between $1.5 billion and $2 billion and encompasses First Quantum’s prominent copper mines, namely the Kansanshi and Sentinel mines, along with the Enterprise nickel mine. This prospective acquisition aligns with Manara Minerals’ recent expansion initiatives, which include a substantial commitment of $1 billion to Barrick Gold’s Reko Diq project in Pakistan and a notable investment of $2.5 billion in Brazilian mining leader Vale. Selling these Zambian assets could prove advantageous for First Quantum, enabling the company to alleviate its debt while maintaining control over its critical operations, especially in light of the financial strain it has experienced following the government-mandated closure of its flagship Cobre Panama mine in December 2023. Consequently, First Quantum is actively pursuing capital restructuring strategies, including asset sales and a proposed $1 billion share offering. Zambia is recognized as a significant contributor to global copper production, presenting considerable opportunities for mining investors, especially given the metal’s pivotal role in the green energy transition. Earlier this year, a notable startup supported by prominent billionaires, including Bill Gates and Jeff Bezos, announced the discovery of one of the largest copper deposits in Zambia’s history at the Mingomba site. However, the nation’s mining sector continues to grapple with major infrastructural challenges, particularly concerning underdeveloped transportation networks and persistent power supply issues. Currently, Zambia’s reliance on hydropower for approximately 80% of its electricity supply has rendered it vulnerable to the adverse effects of droughts and erratic rainfall, leading to frequent power shortages. Ensuring a steady energy supply for mining operations has become increasingly critical for companies such as First Quantum. To address these power challenges, the company has resorted to emergency measures, including importing electricity from South Africa’s Eskom. Power outages are detrimental to operations, deterring foreign investment in the mining sector, which is responsible for generating up to 70% of the nation’s exports while consuming about half of the country’s electrical power demand. Consequently, the ambitious government plan to elevate copper production to 1 million tons by 2026 is under scrutiny owing to these infrastructural impediments.

This article delves into the recent developments surrounding Saudi Arabia’s investments in Zambia, specifically focusing on the partnership between the Saudi Public Investment Fund and Ma’aden as they eye a significant stake in First Quantum Minerals. The context includes First Quantum’s ongoing financial challenges, exacerbated by external factors such as the closure of their Cobre Panama mine. It also emphasizes Zambia’s potential as a major player in copper production, despite facing critical infrastructure deficiencies and power supply constraints that affect the mining industry’s viability.

In summary, Saudi Arabia’s intent to invest billions in Zambian mining assets reflects a significant move towards strengthening its foothold in the global minerals market. Despite Zambia’s vast copper production potential that is critical for the green energy sector, considerable challenges concerning infrastructure and power supply remain. The outcome of these investment negotiations may influence both First Quantum’s financial flexibility and Zambia’s appeal as a mining investment destination amidst its infrastructural hurdles.

Original Source: www.benzinga.com