South African Miners Vie for Botswana’s Khoemacau Copper Mine

In a high-stakes race to secure one of Africa’s largest copper deposits, at least three South African mining giants are reportedly competing to acquire Botswana’s Khoemacau copper mine. The surge in global demand for copper has fueled intense competition for this coveted asset, sources with insider knowledge revealed to Reuters.

Johannesburg-listed companies, Impala Platinum (IMPJ.J), Exxaro Resources (EXXJ.J), and Sibanye Stillwater (SSWJ.J), are actively considering bids for the copper and silver mine in Botswana, as per the undisclosed sources. Additionally, undisclosed Chinese investors have also expressed interest in Khoemacau Copper Mining operations.

Impala declined to comment on the matter, while Exxaro remained silent in response to emailed inquiries. However, Sibanye confirmed its keen interest in the opportunity. Sibanye Spokesperson, James Wellsted stated, “We are looking all the time for opportunities, and Khoemacau came up on our radar. We have entered into a non-disclosure agreement to better understand the opportunity. However, Khoemacau is highly competitive, and we are cautious not to engage in a bidding war that fails to create value.”

The growing demand for copper, driven by applications ranging from solar panels to electric vehicles, has spurred miners worldwide to seek increased copper supplies. Although copper prices have faced temporary declines due to global economic concerns, long-term prospects for the metal and the intense bidding process are likely to make it challenging for any bidder to secure a favourable deal, according to two of the sources.

Khoemacau’s owners, Cupric Canyon LP (a U.S. private equity firm managed by Global Natural Resources Investments – GNRI) and Resource Capital Fund VII LP, revealed in May that they had initiated discussions with potential buyers. The process is expected to continue over several months, with finalisation anticipated towards the end of 2023.

Diversified miner South32 (S32.AX) and Australian competitor Sandfire Resources (SFR.AX) reportedly withdrew from the bidding process following the initial round due to the mine’s lofty valuation, sources claimed. Khoemacau is estimated to be valued between $1.5 billion and $2 billion, according to three banking sources.

Graham Kerr, CEO of South32, hinted at the cost being a significant factor during the company’s August earnings results, stating, “That’s probably a very competitive process and one that will be a little bit too rich for our blood.” South32 declined to provide further comment.

Analysts at Citigroup suggested in a note that while the assets could be valued at $1.8 billion, an investment of $1.2 billion would be justifiable for South32.A spokesperson for Sandfire declined to comment on the ongoing process.

Situated in the Kalahari Copper Belt, an expansive region stretching from northeast Botswana to parts of western Namibia, Khoemacau currently produces approximately 60,000 tons of copper and about 2 million ounces of silver annually. With additional investments, future output could potentially surge to around 130,000 tons of copper and 5 million ounces of silver per year.

Khoemacau’s owners remain open to either a partnership or an outright sale, according to one of the sources with knowledge of the situation. The outcome of this fierce competition will undoubtedly have a substantial impact on the future of copper mining in the region and global copper.