Zambia Investor Briefing: March 2024

Investor Briefing

25 Apr

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OVERVIEW

In a major development that brings Zambia significantly closer to the completion of its debt restructuring, the government has agreed a revised restructuring deal with bondholders for nearly $4 billion. The Zambian government has said it had “received confirmation that the agreed terms are compatible” with the view of official creditors. This leaves only debts to private corporations still in need of restructuring.
International Resource Holdings (IHR), a unit of Abu Dhabi’s International Holding Company (IHC), is reportedly interested in acquiring an 80% stake in Lubambe Copper Mine, despite China’s JCHX Mining having agreed in January to purchase the asset. This comes days after Hichilema announced the UAE firm had acquired a 51% controlling stake in Mopani Copper Mines, ahead of Sibanye Stillwater and China’s Zijin Mining Group.
According to First Quantum Minerals (FQM)’s Chairman Robert Harding, multiple parties have expressed interest in acquiring a minority stake in the mining conglomerate’s Zambian operations.
Fund manager XSML Capital will expand into Zambia this year, its managing partner Barthout van Slingelandt told The Africa Report. Currently based in Angola, the DRC and Uganda, XSML focuses on SMEs – particularly in consumer-facing industries such as retail, call centres and hospitals. The fund is expected to invest in 40 to 50 companies across the four countries with an average ticket size of $2.5 million.
The Zambian government has signed a partner support agreement worth $8.2 million with TradeMark Africa (TMA) to upgrade the Nakonde One Stop Border Post, a key Zambia-Tanzania trade route. The investment is set to streamline operations along the corridor. Speaking at the singing of the agreement, TMA CEO David Beer said the deal marks the beginning of several transformative projects that have been lined up for Zambia.

A CLOSER LOOK

Debt Restructuring

Zambia has agreed a revised debt restructuring deal with bondholders of nearly $4 billion. This deal with private creditors was the final hurdle for the country's debt restructuring, as the president had announced in February that China and India – the last two countries that had been yet to sign as official creditors – had signed agreements to restructure their holdings of Zambian debt.

The Zambian government has said it had “received confirmation that the agreed terms are compatible” with the view of official creditors. The terms include “foregoing around $840 million in claims and offering approximately $2.5 billion in cash flow relief through reduced debt servicing payments during the IMF Programme period”. According to Hichilema: “Now that this is done, our economic recovery is back on track”.

This comes days after Hichilema told the Financial Times that the delay of Zambia’s creditors to end the stand-off over its $13 billion debt restructuring was “an indictment” of the credibility of the global system, as he urged the country’s creditors to “walk the extra mile and close this transaction”.

Mining Developments

International Resource Holdings (IHR), a unit of Abu Dhabi’s International Holding Company (IHC), is reportedly interested in acquiring an 80% stake in Lubambe Copper Mine, despite China’s JCHX Mining having agreed in January to purchase the asset. Lubambe, which is currently owned by the private equity manager EMR Capital, has the potential to be one of the country’s largest copper mines. The Zambian government through ZCCM Investment Holdings owns a 20% stake, and has yet to approve the facility’s sale.

This followed shortly after Hichilema’s announcement that the UAE firm had acquired a 51% controlling stake in Mopani Copper Mines, ahead of Sibanye Stillwater and China’s Zijin Mining Group. According to ZCCM-IH the deal will see $620 million provided in the form of new equity capital, while around $400 million will be provided as a shareholder loan. The Zambian government retains a 49% stake. The president described the deal as a “significant milestone, being the first substantial investment from the UAE in Zambia”.

In other mining developments, First Quantum Minerals (FQM)’s Chairman Robert Harding told Bloomberg multiple parties have expressed interest in acquiring a minority stake in the mining conglomerate’s Zambian operations. According to Harding, the company is looking for a partner that could “perhaps take interest in working with us on a future project”. FQM’s Zambian assets include the Sentinel and Kansanshi copper mines, as well as a nickel mine. Last year the country accounted for around half the company’s copper output and revenue, delivering more than $450 million in profit.

Elsewhere, Jubilee Metals is looking to “significantly step-up” its copper output in Zambia, according to CEO Leon Coetzer. To reflect the company’s planned expansion it has unveiled two separate boards for its Zambian and South African operations.

Foreign Direct Investment

The UK has pledged £6 million to protect Zambia’s forests and cut emissions in the country. Part of the funding will “support the rollout of climate-smart agriculture practices among smallholder farmers”, which will help to strengthen food security. Training is set to be provided to over 100,000 farmers .

This month, Hichilema hosted the Ambassador of Finland Saana Halinen to State House, as well as a delegation of the Finance Committee of the Parliament of Finland. The parties called for increasing cooperation between the two nations, particularly in mining where Finland has a great deal of experience in geological surveying.

The Zambian president also welcomed to State House a delegation from Saudi Arabia, led by its Minister of Environment, Water, and Agriculture Abdurahman Abdulmohsen A. Alfadley. They discussed avenues for future cooperation and investment, particularly technology and mining.

OTHER NEWS

KoBold Metals discovery accelerates global race for critical minerals (The Africa Report, 06.03.24)

Three presidents on how to make global finance work better for Africa (The Economist, 06.03.24)

Bill Gates-backed startup confident it can unearth more buried treasure after a historic copper find (CNBC, 06.03.24)

Blue economies could transform Zambia from landlocked to ‘land-linked’ nation (Daily Maverick, 13.03.24)

European Investment Bank sees green opportunities in Africa (Bloomberg, 13.03.24)

UPCOMING EVENTS

EU-Zambia Copper Business Forum: Growing the Copper Industry in Zambia through Green Value Chains - Kitwe, Zambia, 10-12.04.24

World Travel Market Africa - Cape Town, SA, 10-12.04.24

Invest in Africa Summit 2024 - Wassenaar, Netherlands, 16-17.04.24

20th Annual AVCA Conference & VC Summit - Johannesburg, SA, 22-26.04.24

Sustainable Horizons: Investing in the Renewable Power of Africa (Invest Africa) - Johannesburg, SA, 23.04.24