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Barrick Gold prepares for Zambian copper mine sale2 minutes read

Barrick has said it plans to shed $1.5 billion of less productive mines.

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Barrick Gold prepares for Zambian copper mine sale
Zambia's Lumwana copper mine. Photo credit: AFP

The world’s second largest bullion miner, Barrick Gold Corp, is preparing its Zambian copper mine, Lumwana for sale in the second half of 2019, looking to target Chinese buyers.

Fresh from two major deals in recent months, Barrick has said it plans to shed $1.5 billion of less productive mines, which have little expansion potential.

Among the possible sales, is Lumwana, a relatively low-grade copper mine- whose margins could be materially affected by Zambia’s new mining code and import duty. Analysts value the mine at up to $500 million.

Barrick is holding discussions with investment banks about appointing advisers to the sale, the sources said.

Two of the sources say that a bank with links to Chinese companies was likely to get the advisor role for Lumwana.

The group 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.

The sale process, however, may not be easy, sources say, as the potential acquirer will have to be comfortable with the risk associated with tax changes in Zambia.

Pure copper

Africa’s second-biggest copper producer is determined to enforce a new 5% copper import duty and also plans to replace value-added tax with a non-refundable sales tax as part of a plan to keep a greater share of mineral resource profits for the country and tackle its debt.

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, betting that a global need for its resources, particularly copper, essential for manufacturing electric cars, and cobalt, used in lithium-ion batteries, will keep the tax receipts flowing.

Diversified miners, Glencore, Vedanta Resources and First Quantum also operate in the country.

Lumwana’s sale does not signal a complete exit from copper assets for Barrick. The company is interested in acquiring assets that include both copper and gold, and pure copper projects if it has a competitive advantage over traditional copper miners, Chief Executive Officer, Mark Bristow told Reuters last week.

Over the past six months, Barrick closed a $6.1 billion 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.

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Heavy rains threaten Uganda’s coffee crop quality

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Uganda’s coffee crop quality could see a decline in the coming months as heavy rains across the country have reduced the amount of sunshine necessary for bean drying.

Uganda is Africa’s largest exporter of coffee followed by Ethiopia and grows mostly robusta variety.

The country has been pounded by unusually heavy rains that started in August resulting in deaths, displacement and extensive damage to roads and other infrastructure.

Western Uganda, including the foothills of the Rwenzori mountains , some of the biggest coffee growing areas, has received some of the most intense rains.

Uganda Coffee Development Authority (UCDA), the state-run regulator, forecasts Uganda’s bean exports will climb 16 percent to 5.1 million 60-kg (132-pound) bags in the current crop year ending September.

The country’s coffee output has surged in recent years, the fruition of a government programme that has been distributing free seedlings to farmers to expand acreage and replace aging trees.

Authorities say their target is to help boost annual production to 20 million bags by 2025.

The beans have traditionally been Uganda’s biggest commodity export but were recently overtaken by gold which now annually earns the country over $1 billion.

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Business rescue team rule out mid-June return for SAA flights

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South African Airways business rescue practitioners have rejected an “unvetted” statement released by the state-owned airline indicating plans to resume domestic flights from mid-June.

The national carrier had on Tuesday, announced that its planes will be back in the skies between Johannesburg and Cape Town.

But Les Matuson and Siviwe Dongwana, the business rescue administrators, say the airline had breached communications protocol by issuing a statement which “created an unfair expectation on our relevant stakeholders, including SAA’s customers, as well as employees who are on unpaid absence as a result of the travel ban which led to the halting of the company’s operations, compounding its financial distress.”

SAA’s media statement had gone out without the approval of the practitioners as demanded by the business rescue procedure.

With the government of South Africa announcing that the country will enter into lockdown alert level 3 from June 1, domestic air travel will be permitted but only for business purposes.

The business rescue practitioners said SAA planes will remain grounded until a better understanding of what the level 3 regulations entail.

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Tanzania, France sign water supply loan agreement

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Tanzania has signed a loan agreement with France to finance water supply projects that will benefit about 770,000 people in the country’s Morogoro municipality.

The French government will extend the loan worth about $76 million to Tanzania through its French Development Agency (AFD), according to Dotto James, the Permanent Secretary in the Ministry of Finance and Planning who signed the agreement on behalf of Tanzania.

“Upon completion, the water supply in the Morogoro municipality will increase from the current 37,000 cubic meters a day to 108,000 cubic meters a day,” James told a press conference following a signing ceremony in Morogoro.

AFD Country Representative for Tanzania, Stephanie Mouen says the project will improve the well-being of the people in the municipality and it will also improve the environment.

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