Saudi Arabia Targeting Billions In Zambian Assets, Despite Persistent Infrastructure Troubles

Manara Minerals, a joint venture between Saudi Arabia's Public Investment Fund (PIF) and Ma'aden (Saudi Arabian Mining Co), is nearing a deal to purchase a 15% to 20% stake in First Quantum Minerals FQVLF Zambian copper and nickel assets.

The potential transaction, which Reuters reported citing information from trusted sources, is valued between $1.5 billion and $2 billion. It includes First Quantum's Kansanshi and Sentinel copper mines and the Enterprise nickel mine.

This deal aligns with Manara's recent investments, including a $1 billion commitment to Barrick Gold's Reko Diq project in Pakistan and a $2.5 billion investment in Brazilian mining giant Vale.

The sale of its Zambian assets would help the company manage its debt while retaining control over its key operations.

In December 2023, after the Panama government ordered the shutdown of its flagship Cobre Panama mine, First Quantum lost significant revenue, pushing the company to explore capital restructuring, including selling assets and issuing a $1 billion share offering.

Zambia, a major player in global copper production, holds vast potential for mining investors, as this metal is critical to the green energy transition. This year, B, a startup backed by billionaires including Bill Gates and Jeff Bezos, announced the discovery of one of the largest copper deposits in Zambia's history at the Mingomba site. However, the country's mining sector faces significant challenges, particularly in terms of infrastructure.

Road and rail networks are underdeveloped, limiting material transport, and the country has faced ongoing issues with power supply.

Zambia relies on hydropower for 80% of its electricity, but droughts and fluctuating rainfall have caused frequent shortages.

For companies like First Quantum, ensuring consistent energy for operations has become a key concern. Emergency measures such as importing electricity from South Africa's Eskom have been implemented to mitigate the impact.

Power outages disrupt operations and make mining investments less attractive to foreign investors. The mining industry generates as much as 70% of exports while using about half of the national power demand, making the country's plan to boost the copper output to 1 million tons by 2026 ambitious.

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