South Africa: Big Tree Copper to raise $18m with AltX listing

By Xolisa Phillip
Posted on Friday, 17 June 2022 11:27

Cape Town's planned new stock exchange is betting that the Johannesburg bourse has become too big to serve small companies. REUTERS/Siphiwe Sibeko.

“People … [must] cast their eyes to the Northern Cape, it’s going to become the next metals province of South Africa,” says Jan Nelson, CEO, Big Tree Copper.

“You’re going to see more companies [coming into the Northern Cape] and a lot of development,” he says. “I think it’s going to become the next economic hub of South Africa. Watch out – we’re going to list.”

Big Tree Copper, South Africa’s only premium copper producer, operates a processing plant in Nababeep, an old mining town in the Northern Cape that lost its shine with miners Newmont and Gold Fields in the mid-2000s, when the price of copper bottomed out.

The green economy – and copper’s essential role as a component in wind turbines, solar, and electric vehicles (EVs) – is fuelling the metal’s resurgence and a rebound in its price.

The current price of copper is between $9,500 and $10,000 per tonne. “We see that price going to $12,000 and $14,000 [a] tonne in the next two years. Our total all-in costs to produce copper are about $3,500 per tonne,” says Nelson.

We want to tap the capital markets and the institutions. For that, we need to be listed

To capitalise on the impending appreciation, “we’ve decided to list the company on the AltX of the Johannesburg Stock Exchange (JSE)”, Nelson says. “We are looking to raise R300m.”

Capital markets

Big Tree Copper is in the process of making document submissions to the JSE and, subject to approval from the bourse, the company expects to make its AltX debut on 1 October 2022.

“We’ve been funding the growth of the company from private individuals. When we take the next step, [which is] … to build a mine, the capital profile gets bigger,” Nelson says.

“We want to tap the capital markets and the institutions. For that, we need to be listed. You can be somewhat private, but most funds would like you to be listed. Listing also gives us access to a larger group of retail shareholders,” according to Nelson.

Once listed, Big Tree Copper wants to open the Rietberg mine in Okiep, 15km from the company’s Nababeep copper processing facility.

The Rietberg mine has already been developed and has existing drilled-out ore bodies. “Because of that developed infrastructure, most of the money [we raise] will go towards the installation of cables for power and a processing plant. That’s why we only need to raise R300m,” Nelson says.

In Nababeep, a small town of about 5,500-6,000 with an unemployment rate of 90%, “we’ve created jobs for close to 200 people,” Nelson says. “We help about another 100 people.”

In the next two years, by which time Big Tree Copper would have listed and realised some of its growth ambitions, Nelson expects the company to employ another 1,000 people.

“There’s also a lot of secondary business opportunities. On our site, for example, there’s a carpenter shop. We’ll help bring in carpenters. We can see the town turning around,” he says.

Out the gate

At the Nababeep facility, Big Tree Copper has an offtake agreement with Noble Metals.

“We produce copper plates that are 1m by 1m and about 3cm to 4cm thick. Noble Metals takes possession of those copper plates at the mine gates – then it’s their property,” Nelson says.

There isn’t enough copper in the world. It doesn’t have a replacement.

Noble Metals transports the copper plates to the harbour, from where the product is shipped to Singapore and Hong Kong.

“We weigh it within our mine gates. When the copper gets to the harbour, Noble Metals does checks and then makes payment,” says Nelson.

“The advantage is that when the copper leaves the mine gates the logistics, in terms of trucking and security, are the responsibility of Noble Metals, which is good for us,” Nelson says.

In May 2021, the South African government published a draft auto green paper to chart the next course for the industry’s transition from internal combustion engine production to EVs.

In the green paper, a discussion document published before the government adopts a policy position, it is estimated that the European Union – South Africa’s largest auto export market at 59.8% of total units shipped abroad in 2020 – will increase its share of EV imports to 40% by 2030. That figure is projected to rise to 80% by 2040.

We have to find a Chuquicamata every year for the next 10 years to meet copper demand, which is impossible

On average, an EV uses about 85kg of copper, according to Big Tree Copper.

Additionally, copper is important in infrastructure development. “There isn’t enough copper being produced to supply current demand for wiring in buildings, roads, and [other] infrastructure,” says Nelson.

“If you add to that EVs, there isn’t enough copper in the world. It doesn’t have a replacement. The fact that we sit in an area where there is a lot of copper, which can be mined, is very good,” Nelson says.

“Chuquicamata [in northern Chile], for example, is one the biggest copper mines in the world. We have to find a Chuquicamata every year for the next 10 years to meet copper demand, which is impossible,” he says. “Our role is not just supplying the metal that drives the green economy in terms of infrastructure and EVs.”

“We are [rehabilitating] old mines where rock dumps were left behind. We mine those rock dumps, clean them up, and redeposit the stuff after we’ve neutralised the material to fill up old mining cavities,” Nelson says.

According to Nelson, the Northern Cape has plenty of such opportunities. So, too, does the rest of Africa. That is why he says: “The Northern Cape is going to develop into the next big sector in terms of copper base metals.”

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