FQM reportedly in talks with Jiangxi to sell stake in Zambian copper mines

First Quantum Minerals is reportedly in talks to sell a stake in its Zambian copper mines to Chinese state-owned Jiangxi Copper Corporation.

According to Reuters report monitored by Zambia Monitor on Friday, the move is aimed at bolstering the company’s finances.

A person familiar with the matter said to have told Reuters that talks began last month after First Quantum suffered a major blow in Panama, where it was ordered to shut one of the world’s biggest copper mines, which debt rating agency Fitch has warned could hurt the company’s borrowing capacity.

Details are yet to be finalized and it was not clear whether the latest talks would lead to a transaction, the person said.

In Zambia, First Quantum wholly owns the Sentinel mine and 80 percent of the Kansanshi mine, with the rest owned by the Zambian government.

Jiangxi, First Quantum’s top shareholder, could end up buying one of the two mines or a stake in one of them, the person added.

“The Chinese want the Zambian mines…so the company (First Quantum) could sell one of the Zambian mines,” the source said.

The person declined to be named as they were not authorized to talk to media.

A First Quantum spokesperson declined to comment on the talks but said the company would provide an update later this month on the company’s plan to meet its debt obligations.

Some US$1.05 billion of First Quantum’s debt comes up for maturity in early 2025.

Jiangxi Copper did not respond to an email query by Reuters.

The two Zambian mines together were said to have generated US$943 million revenue in the quarter ending September 2023 and US$210 million in operating profit, according to company filings.

Based on the earnings, the Zambian assets could be valued around US$6 billion, analysts estimate.

First Quantum and Jiangxi held similar talks over the Zambian mines in 2019.

Those discussions ended up with Jiangxi picking up a significant minority stake in the company instead of stakes in the mines.

Jiangxi now owns an 18.2 percent stake in First Quantum.

The two parties have a standstill agreement which prevents the Chinese company from raising its stake beyond 20 percent .

First Quantum has lost more than half its market value, or about C$10.3 billion ($7.7 billion), since protests erupted in late October against its Cobre Panama mine.

The mine accounted for about 40 percent of the company’s revenues.

In December, Fitch warned that if the Cobre Panama mine were permanently shut, First Quantum’s net debt leverage ratio in 2024 would increase to more than five times earnings before interest, tax, depreciation and amortization, which could result in a covenant breach.

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