Jiangxi Copper acquires 18% stake in Canadian miner for US$1.1 billion
Chinese firm signs deal to buy 100% equity interest in special purpose vehicle holding the shares of Toronto-listed mining company
17 Dec 2019 | Michael Marray

A Hong Kong-listed unit of Jiangxi Copper Corporation has acquired an 18% stake in Toronto-listed mining company First Quantum.

Jiangxi Copper Co signed a share sale and purchase agreement to acquire a 100% equity interest in a special purpose vehicle (SPV) holding the shares at a cost of US$1.1 billion.

Following the purchase of the PIM Cupric Holdings SPV, Jiangxi Copper will hold 18.015% of First Quantum’s shares, making it the company’s largest shareholder.

China Development Bank, China Construction Bank and Citic Bank provided a US$700 million loan to part finance the acquisition of the stake. Another US$213 million is being made available to the Hong Kong Stock Exchange-listed entity by its mainland China parent company.  

First Quantum executives told Bloomberg that they were taken by surprise by the share purchase. 

First Quantum and Jiangxi Copper had previously been involved in talks over Quantum selling a minority stake in its Zambian operations at Kansanshi. As part of those talks, the company required Jiangxi Copper to sign a non-disclosure agreement that restricts it from buying more than 20% of First Quantum’s shares.

In September, First Quantum said in a statement to the Toronto Stock Exchange that it was aware of speculation regarding a potential transaction involving Jiangxi Copper.

The company confirmed that discussions regarding a potential sale of a minority interest in First Quantum’s Zambian copper assets had occurred and were continuing, but that no transaction had been agreed upon, and there is no guarantee that a transaction will be achieved. 

The statement also addressed speculation about a takeover bid, saying that First Quantum has not engaged in any discussions regarding a takeover bid or other change of control transaction and has no knowledge of potential takeover bids, change of control transactions or proposals.

First Quantum is currently in a dispute with the Zambian government over a claim for unpaid import duties.

Additionally, last week Zambia’s Kansanshi Holdings began arbitration proceedings against ZCCM Investments Holdings and Kansanshi Mining following a complaint from Zambian state mining company ZCCM-IH, which jointly owns Kansanshi, relating to an allegedly unauthorized money transfer.

Kansanshi mine, the largest copper mine in Africa, is owned and operated by Kansanshi Mining PLC which is 80% owned by a First Quantum subsidiary. The remaining 20% is owned by a subsidiary of ZCCM. The mine is located approximately 10 kilometres north of the town of Solwezi and 180 kilometres to the northwest of the Copperbelt town of Chingola.

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