Mitsui Said to Be Top Bidder for First Quantum Mines Stake
By Archie Hunter, Thomas Biesheuvel, Vinicy Chan, and Dinesh Nair
Scott Bauer, chief executive officer at Prosper Trading Academy, joins BNN Bloomberg to discuss the start of mining's earnings season.
(Bloomberg) -- Japanese trading house Mitsui & Co. has emerged as the highest bidder for a stake in First Quantum Minerals Ltd.’s Zambian copper mines, according to people familiar with the matter.
Mitsui submitted an offer that’s higher than a rival proposal from Saudi Arabia’s state-backed Manara Minerals Investment Co., the people said, asking not to be identified because the information is private. The Japanese company is considering buying a roughly 20% interest in First Quantum’s Sentinel and Kansanshi mines for about $2 billion, according to the people.
Tokyo-based Mitsui is now seeking to negotiate terms of a deal with First Quantum, according to the people. There’s no certainty the deliberations will lead to a transaction, and First Quantum could sell a stake to another party or decide against pursuing a deal, the people said.
First Quantum is selling a stake in its Zambian assets after it was ordered to close its flagship copper mine in Panama last year following public protests. That left the company under pressure to refinance the debt it took on to build the mine.
Shares of First Quantum have gained about 67% in Toronto trading this year, giving it a market value of about C$15.1 billion ($10.8 billion). Zambia accounted for about half of First Quantum’s copper output and revenue last year, and delivered more than $450 million in operating profit.
A spokesperson for Mitsui didn’t immediately respond to queries, while representatives for First Quantum and Manara declined to comment.
Copper mines are attracting interest from a range of investors because demand for the metal is expected to soar in the coming years. Copper is crucial for the production of electric vehicles and renewable energy infrastructure, while there’s a lack of new mines being built.
Japanese trading companies like Mitsui have long been interested in buying minority stakes in mines to secure materials for the country’s domestic industry. Yet in recent years they’ve faced increased competition from state-backed entities in the Middle East and China.
Many in the industry had seen Manara as the most likely winner. Backed by the Saudi sovereign wealth fund, it’s spearheading the kingdom’s ambitious plan to become a major player in metals and mining.
The vehicle, which has been tasked with snapping up stakes in mines overseas and funneling the raw materials back to Saudi Arabia for processing, raised eyebrows across the mining world when it bought a 10% stake in Vale SA’s base metal business for about $2.5 billion.
Still, Manara is becoming increasingly determined to not to be seen to overpay for assets, despite its wealthy backer.
--With assistance from William Clowes, Jacob Lorinc, Koh Yoshida and Matthew Martin.
(Updates with background throughout.)
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