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A path from London to Zambian copper
November 16, 2010 10:22am
by Barney Jopson
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If you’re looking for ways to play the copper price, a new option is about to arrive in London via Lusaka, Zambia. Vedanta Resources, the London-listed Indian mining group, said on Tuesday that it wanted to list its Zambian copper business independently in London.
Konkola Resources, an integrated mining business, is set to raise at least $1.1bn, according to one analyst, and would be the first Zambian company to have a primary listing on the London stock exchange. With copper trading close to an all-time high, it’s obvious why Vedanta sees now as a good time to cash in on the asset.
Vedanta currently owns 79.4 per cent of Konkola and it will remain a majority shareholder in the company after its listing, but London stock exchange rules require that at least 25 per cent of its shares are sold into the market.
In a note to clients on Tuesday, analysts at Liberum Capital, who had run a “less conservative” set of numbers on the business, came up with a valuation of $7.1bn for the whole operation.
Liberum said that once several projects were completed, the company expected to have production capacity of 400,000 tonnes per year (which, to put it in context, compares with global mined copper production last year of 15.5m tonnes).
Zambia’s first London listing will no doubt stir some national pride in the southern African country, at least among the elite, but Konkola is going to be a play on the copper price rather than on Zambia itself.
Last week copper hit an all-time high of $8,966 per tonne, although it was trading lower on Tuesday morning at $8,520 per tonne.