Barrick Gold could be looking to sell its Zambian copper mine

May 15, 2019

Following its acquisition of Randgold Resources and its merger in Nevada with Newmont Goldcorp, it appears that Barrick Gold Corp. may be starting the process of shedding is less productive mines. Reuters reported that Barrick is preparing to sell the Lumwana copper mine in Zambia.
Barrick has said it plans to shed $1.5 billion of less productive mines, which have little expansion potential.

Although the company did not respond for the Reuters story, three people with knowledge of the matter told the news organization that Lumwana is among the possible sales, as a relatively low-grade copper mine whose margins could be materially affected by Zambia’s new mining code and import duty. Analysts value the mine at up to $500 million.

Barrick is holding discussions with investment banks about appointing advisers to the sale, the sources said.

Two of the sources said that a bank with links to Chinese companies was likely to get the advising role for Lumwana.

The group is looking to enter talks with Chinese state-owned companies including Aluminum Corp of China, known as Chinalco, and China Minmetals Corporation, which have been seeking growth abroad and a foothold in Africa, lured by its vast resources.

Zambia, Africa’s second-biggest copper producer, is determined to enforce a new 5 percent copper import duty and also plans to replace value-added tax with a non-refundable sales tax as part of a plan to keep a greater share of mineral resource profits for the country and tackle its debt.
The new taxes also include a royalty on copper production that increases as commodity prices rise.

Zambia has overcome opposition of some of the world’s biggest mining companies, betting that a global need for its resources, particularly copper, essential for manufacturing electric cars, and cobalt, used in lithium-ion batteries, will keep the tax receipts flowing.

Diversified miners Glencore, Vedanta Resources and First Quantum also operate in the southern African country.

The sale of Lumwana doesn’t signal a complete exit from copper assets for Barrick. The company is interested in acquiring assets that include both copper and gold, and pure copper projects if it has a competitive advantage over traditional copper miners, Chief Executive Officer Mark Bristow told Reuters previously.

Over the past six months, Barrick closed a $6.1 billion acquisition of African miner Randgold Resources and formed a joint venture with rival Newmont Goldcorp to combine operations in U.S. Nevada to create the world’s biggest gold complex.



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