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Written by Julian Luk and Divya Rajagopal
LONDON/TORONTO (Reuters) – Executives from Canadian mining company First Quantum Minerals met with Chinese government officials last week to discuss financing and business options involving top investor Jiangxi Copper. Three sources familiar with the matter said the two had discussed the matter.
Talks in Jiangxi province include the possibility that state-run Jiangxi Copper Industry, one of China’s top producers, could influence First Quantum’s board decisions, two people familiar with the matter said. It is said that it was The future of First Quantum’s Zambian assets and the prospect of Jiangxi purchasing disputed copper concentrate stocks from Panama were also discussed.
Since November last year, Jiangxi has invested about $745 million in First Quantum through debt, equity and upfront copper deals. Still, despite being one of the largest shareholders, Jiangxi does not have a say in board decisions.
Under the suspension agreement, Jiangxi Province cannot purchase more than 20% of First Quantum’s shares. Currently it is 18.4%.
It is unclear whether there will be any further investment after the meeting, one of the people said.
First Quantum declined to comment, while Jiangxi Copper did not respond to email or telephone inquiries from Reuters.
Relations between Jiangxi province and First Quantum have been volatile since 2019, when the Chinese mining company invested $1 billion, leading to speculation that the company may be preparing for a hostile takeover. is increasing.
But Jiangxi has been a staunch supporter of Canadian companies during their recent turmoil, buying bonds and stocks over the past four months.
“So far, they (Jiangxi) have been the most beneficial partner for the company,” said a person familiar with First Quantum’s operations.
First Quantum has lost about C$8 billion, or $5.89 billion, in market capital since the Panamanian government ordered the closure of the Cobre Panama mine late last year following ongoing local protests.
The sudden order to shut down Cobre Panama, which accounts for 40% of First Quantum’s revenue, dealt a blow to investor confidence and led to a downgrade of its debt rating.
In February, First Quantum announced measures including the issuance of $1 billion worth of common stock and a $500 million upfront copper agreement with Jiangxi province. Jiangxi also bought First Quantum stock for $212 million in early March.
First Quantum continues to negotiate with the Panamanian government to resolve the dispute. One of the discussions focuses on selling copper concentrate to pay for the care and upkeep of the disputed mine.
Jiangxi Copper accounted for a fifth of China’s total output last year and is one of the world’s top buyers of mined copper raw materials, but like other copper smelters it is facing a severe shortage of raw materials. ing.
Reuters previously reported that Jiangxi Copper is in talks to acquire an interest in First Quantum’s Kansansi mine in Zambia.
($1 = CAD 1.3562)
(Reporting by Julian Luk and Divya Rajagopal; Editing by Veronica Brown and Bernadette Baum)
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