This comes as good news to Zambia, which missed a $42.5 million interest payment on part of its international debt last week, becoming Africa’s first bond default during the coronavirus pandemic.
President Edgar Lungu’s government, who is battling for re-election next year, has blamed covid-19 for problems managing the country’s $12 billion debt.
While it seeks a compromise with bondholders, the government has announced it has no plans to sell its shares in mining companies it has stakes in to raise cash.
Zambia’s mining assets have been in the spotlight as the country’s financial situation deteriorated this year and the pandemic prompted Glencore (LON: GLEN), one of the biggest miners operating in the country, to shut its Mopani Copper Mines (MCM).
The move angered the government, which threatened to revoke Mopani’s mining licenses and temporarily blocked its chief executive officer Nathan Bullock from leaving the country.
Glencore reacted by putting its 73.1% stake in the operation on the table, hoping to reach a deal with authorities.
No plans to sell mining stakes
Zambia said earlier this week that negotiations with Glencore about increasing the government’s stake in Mopani were nearing a conclusion, although no information about the size of the stake that state-owned ZCCM Investments Holdings is trying to acquire was given.
The government, which was in arbitration over mining assets it seized last year from billionaire Anil Agarwal’s Vedanta Resources, lost an important battle in the case on Friday.
A local court ordered a halt to liquidation proceedings KCM to allow owners Vedanta and ZCCM-IH to proceed to arbitration.
The ruling hands a significant win to Vedanta, which is seeking the removal of the liquidator appointed by ZCCM-IH — which owns 20% of KCM on the government’s behalf — to run the company.
Other copper miners have halted $2 billion of planned investments because of a dispute over royalty taxes.
Zambia has promised to address the issue at a mining conference later this year.
– With files from Reuters and Bloomberg