Barrick Gold Corp is looking to sell off its Zambian copper mine Lumwana. The sale is projected to take place within the second half of 2019. The mining giant is reportedly looking to target Chinese buyers, three sources with knowledge of the matter said.
In a press statement, Barrick has said it plans to shed US $1.5Bn of less productive mines with little expansion potential. Lumwana is included among the possible sales owing to Zasmbia’s new mining code and import duty, which is feared to affect the margins of the relatively low-grade copper mine Zambia’s. Analysts value the mine at up to US $500m.
Barrick is looking to enter talks with Chinese state-owned companies including Aluminum Corp of China, known as Chinalco, and China Minmetals Corporation, which have been seeking growth abroad and a foothold in Africa, lured by its vast resources.
According to media reports, however, the sale process may not be easy as the potential acquirer will need to be conversant with the unpredictability that is tax changes in Zambia.
The new taxes also include a royalty on copper production that increases as commodity prices rise. Zambia has overcome opposition of some of the world’s biggest mining companies, risking that a global need for its resources, particularly copper will keep the tax receipts flowing.
The sale of Lumwana doesn’t signal a complete exit from copper assets for Barrick. Over the past six months, Barrick closed a US $6.1Bn acquisition of African miner Randgold Resources and formed a joint venture with rival Newmont Goldcorp to combine operations in U.S. Nevada to create the world’s biggest gold complex.