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Zambia could get 10% of miner

LUSAKA— FIRST Quantum Minerals may see Zambia’s state-owned mining firm become its second-biggest shareholder if it converts a stake in the continent’s largest copper operation into equity.

ZCCM Investment Holdings would “hopefully” decide this year, said CEO Mukela Muyunda. ZCCM is 88% owned by the government of Africa’s largest copper producer.

If ZCCM decides to exchange its stake in the Kansanshi mine, near the Democratic Republic of Congo border, for First Quantum shares, it could end up owning about 10% of the company, said Stifel Nicolaus Canada analyst George Topping.

BlackRock, the world’s biggest money manager, is First Quantum’s largest owner, with about 12%, according to data compiled by Bloomberg.

“We would be happy if ZCCM becomes a shareholder in First Quantum as part of a step in transforming ZCCM into a sovereign fund,” John Gladston, a Zambia-based spokesman for First Quantum, said on Tuesday.

“It is something First Quantum would be willing to accommodate.”

Zambia sold most of its mining industry to private investors between 1996 and 2001, maintaining stakes from 10% to 21% in companies, which it holds through ZCCM. That reversed a nationalisation process that took place in the 1970s.

ZCCM first said it was considering swapping its Kansanshi stake for shares in First Quantum in December. The company sold its 2.28% stake in Equinox Minerals to Barrick Gold for more than $160m in 2011, having paid $30m for the shares five years earlier.

Mr Topping bases his calculation of the shareholding ZCCM may get in First Quantum on a $5.4bn valuation of the Kansanshi mine. Kansanshi is worth about $6bn, Nomura International analyst Patrick Jones said in a January 16 research report. First Quantum has a market value of C$9bn ($8.8bn).

Finance Minister Alexander Chikwanda declined to comment.

Bloomberg

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