MMG seals $1.9bn deal to buy copper mine in Botswana
China's MMG Ltd., a company controlled by the state-owned China Minmetals Corp., has secured one of the largest copper deals of the year by agreeing to acquire Cuprous Capital Ltd. for $1.9 billion. Cuprous Capital owns the Khoemacau copper mine in Botswana, which has been in production since 2021.
The acquisition of Khoemacau underscores MMG's confidence in the future demand for copper, particularly as the global energy transition gains momentum. Jiqing Xu, the Chairman of MMG, stated that the purchase aligns with the company's belief in copper as a commodity with robust forward demand.
MMG's shares saw a rise of up to 7.5% in Hong Kong following the announcement. The transaction is expected to be finalized in the first half of 2024 and is anticipated to be immediately earnings accretive, according to MMG. This acquisition will complement MMG's existing copper output, which is already more than 350,000 tons at the top end of its guidance for 2023.
Key Takeaways
Copper has become a focal point for global miners as the energy transition gains traction, given its crucial role in electric vehicles and the expanding demand for power grids. While copper prices have experienced fluctuations this year, the long-term outlook suggests an upward trajectory as demand continues to grow, particularly in the renewable energy and electric vehicle sectors. The Khoemacau mine, situated in the Kalahari Copper Belt, is a significant part of this narrative. Stretching from northeast Botswana to parts of western Namibia, the Kalahari Copper Belt is a vast region with strategic copper resources. Khoemacau, producing around 65,000 tons of copper and approximately 2 million ounces of silver annually, is poised for further expansion. With additional investments, its output could be scaled up to approximately 130,000 tons of copper and 5 million ounces of silver per year.
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