(Bloomberg) — China’s MMG Ltd. has completed one of the biggest copper deals of the year, agreeing to pay $1.9 billion for a mine in southern Africa as major commodities groups vie for exposure to the metal.
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MMG, controlled by state-owned China Minmetals Corp., has agreed to buy Cuprous Capital Ltd. The private company owns the Khoemacau mine in Botswana, a relatively new project that has been producing copper since 2021.
Copper has become a major issue for global mining companies, as companies seek to supply metals to new energy industries. The battle for Glencore Plc. to buy Teck Resources Ltd. was driven at least in part by the latter’s copper assets, while BHP Group Ltd. paid $9.6 billion ($0.6.3 billion) this year for its smaller copper rival, OZ Minerals Ltd.
The MMG deal “underlines the company’s confidence in copper as a raw material with strong demand in the future as the global energy transition accelerates,” company president Jiqing Xu said in a press release announcing the agreement. Its shares rose as much as 7.5% in Hong Kong.
The buyout is expected to be completed in the first half of 2024 and will have “an immediate earnings accretive effect,” MMG said.
Khoemacau produces up to 65,000 tonnes of copper ore per year, and plans to expand production to 130,000 tonnes per year, according to MMG. This would add to MMG’s current production of more than 350,000 tonnes at the high end of its 2023 forecast.
Copper prices have drifted this year, but long-term demand is expected to be increasingly driven by its use in renewable energy and electric vehicles. This is already showing in purchasing habits, with China buying more copper this year even as the country’s traditional industrial consumption weakens, according to commodities trader Trafigura Group.
Khoemacau is located in the Kalahari Copper Belt which extends from northwestern Botswana to western Namibia and is considered a promising region for copper supply.
The bidding process for the mine has drawn competition from other Chinese companies, including Zijin Mining Group Co. and Aluminum Corp. of China, known as Chinalco.
MMG has been a major player in the global mining sector for more than a decade, notably after purchasing the Peruvian Las Bambas mine from Glencore Plc. in 2014. This proved difficult due to sporadic community conflicts, and workers called a strike this week.
(Updated with fifth-ranked stock prices and adds detail throughout.)
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