Serial dealmaker Froneman lured by Zambian copper mine assets

Sibanye Stillwater boss Neal Froneman is interested in acquiring Mopani Copper Mines Plc in Zambia as he pushes to secure metals key to the green-energy transition.

The asset would give Johannesburg-based Sibanye a springboard into Africa’s second-largest copper producer, after the company pulled out of a Brazilian deal a year ago. Sibanye is among the investors involved in a sales process organized by Rothschild & Co. South Africa on behalf of state-owned ZCCM Investments Holdings.

Read: Glencore helps Zambia’s Mopani copper mines pay bills

“We like copper. Mopani is obviously of interest to us and Zambia is in our backyard so we like what we see,” Sibanye Chief Executive Officer Froneman said in an interview. “We have got a number of entry points into Zambia. Mopani is just one of the entry points we are looking at.”

Commodities giant Glencore sold Mopani two years ago to ZCCM for $1.5 billion, after clashing with the previous Zambian government over the future of the long unprofitable operation. As part of the deal, some of the cash generated by Mopani goes toward settling the $1.5 billion debt owed to Glencore, which also retains offtake rights to copper output until the full amount is settled.

Read: Zambia expects to find new Mopani copper mine investor by year-end

While the money owed to Glencore makes the potential transaction “a complex issue,” a deal could be finalised by the middle of this year, Froneman said. The company has signed a non-disclosure agreement as part of the sales process, the CEO said.

“We have a good relationship with Glencore, we work together in the chrome here in South Africa, so I think we are very well positioned, but we have to compete with other companies,” the CEO said.

A spokesman for Glencore declined to comment. Rothschild didn’t immediately respond to emailed questions.

Mopani, which struggled to pay its bills last year even as copper prices remained elevated, needs about $300 million of investment to complete expansion projects started by Glencore.

Froneman said he’s encouraged by Zambian President Hakainde Hichilema’s efforts to attract investors and hopes the government plays a “constructive” role in the potential acquisition.

An acquisition would help restore Froneman’s deal-making credentials after Sibanye terminated the $1.2 billion purchase of Santa Rita nickel and Serrote copper mines in Brazil, sparking a dispute that’s now before a UK court. Since its formation in 2013 from a spinoff of Gold Fields oldest South African gold mines, Froneman has bought platinum, palladium, nickel and lithium projects in Zimbabwe, Europe and the US.

Sibanye’s experience — turning around Lonmin Plc’s operations and operating some of the world’s deepest mines — mean the company is well placed to both win and run Mopani, Froneman said.

“We are also a company that can deal with adversity, if I can call it that,” Froneman said. “There’s not many companies that have a balance sheet to tolerate or to take on a risk like this.”

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