(Reuters) – China’s MMG Ltd said on Tuesday it has signed a $1.88 billion share purchase agreement to buy Canada-based Cuprus Capital, the parent company of the Khomakau copper mine in Botswana.
MMG has been exploring copper assets for more than a year, amid surging demand for the metal essential in the green energy transition.
“The acquisition of the Khomakou mine is an important step in achieving our vision of building a leading international mining company for a low-carbon future and will create meaningful long-term value for our shareholders,” Jiqing Xu, chairman of MMG, said in a statement. “
Smelters in China, the world’s top consumer of refined copper, face a growing challenge in securing copper concentrate as they have expanded capacity in recent years amid slow mining output growth.
Reuters reported in September that at least three South African miners were in the race to buy the mine that is home to one of Africa’s largest copper reserves, as surging demand for the metal ensures strong competition for the sought-after asset.
Khoemkau is located in the Kalahari Copper Belt, a vast swath of land that stretches from north-east Botswana to parts of western Namibia.
It produces about 60,000 tons of copper and about 2 million ounces of silver per year. With additional investment, production could be increased to approximately 130,000 tonnes of copper and 5 million ounces of silver per year.
In its filing on Tuesday, MMG said it would meet the consideration or any funding requirements for Cyprus Capital by securing a combination of shareholder loans and third-party financing.
The filing revealed that the deal is pending approval from regulatory bodies in China and Botswana. MMG said it expects the deal to close in the first half of 2024.
Macquarie Capital and Citigroup acted as joint financial advisors to MMG on the deal.
(Reporting by Poonam Behura in Bengaluru, Roxanne Liu in Beijing and Melanie Burton in Melbourne; Editing by Subhranshu Sahu and Stephen Coates)