South32, Sandfire eye Botswana copper mine

Copper assets are in demand as groups look to gain exposure to minerals used to make batteries for electric vehicles. Picture: Bloomberg

Buying the $US2bn copper mine Khoemacau in Botswana is not looking like an easy exercise for Sandfire Resources or South32, with competition for the asset shaping up to be fierce.

DataRoom understands more than 50 parties have signed a non-disclosure agreement to inspect the mine, which is delivering one of the world’s most sought-after commodities. First round bids are understood to be due in about two weeks.

South32 is understood to be serious about buying the asset and is working with Royal Bank of Canada, while Sandfire is also known to be interested.

The copper mine is up for sale through investment bank Credit Suisse (now owned by UBS), while Standard Chartered is advising Sandfire.

South32 made a bid for the Spanish copper mine complex MATSA, which was sold to rival Sandfire two years ago for $2.6bn. Sources say that despite strategic benefits for Sandfire in buying Khoemacau, it is unlikely to progress in the process because it has a lot on its plate.

Khoemacau, located in Botswana’s Kalahari copper belt, is a copper and silver mining company with a 22-year mine life, producing 60,000 tonnes per annum of copper.

It is expected to increase production to 130,000 tonnes per annum.

It is owned by private equity firm Cuprous Canyon Capital, which is owned by Global Natural Resources Investments and Resource Capital Fund VII.

Copper assets are in demand as miners look to gain exposure to minerals used to make batteries for electric vehicles.

No doubt playing a part in the sale price will be the price of copper, which has retreated since its highs last year. The commodity’s price is pegged to economic conditions, given its use in manufacturing, and with rising inflation curbing demand, the price has been lower, although relatively stable since February.