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China group acquires Peruvian copper mine
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A group backed by China Minmetals Corp will buy Glencore Xstrata’s key Peruvian copper mine for US$5.85 billion, in one of China’s largest overseas mining acquisitions.
China would gain control of one of the world’s largest copper projects being built while the deal allows the Swiss commodity trading and mining giant to cut debt. Glencore last year agreed to sell the Las Bambas project in return for its takeover of Xstrata to be approved by China’s authorities.
“The acquisition of Las Bambas is an important milestone for outbound Chinese investment in the global resources industry,” Minmetals President Zhou Zhongshu said, adding that it will improve the company’s mining portfolio and produce synergies with existing businesses.
Glencore CEO Ivan Glasenberg said the China-backed consortium has made a “compelling offer” for Las Bambas. “Our willingness to sell reflects the level of the offer and our conviction that we can utilize the sale proceeds to create additional shareholder value,” he said.
Melbourne-based MMG Ltd, the overseas unit of state-owned Minmetals, holds a 62.5 percent stake in the consortium buying Las Bambas while Guoxin International Investment Corp has 22.5 percent and CITIC Metal Co owns 15 percent.
MMG surged up to 11 percent yesterday in Hong Kong following the announcement.
Las Bambas could produce over 2 million tons of copper concentrate in its first five years of operation, MMG said. The deal could propel MMG ahead of Jiangxi Copper Co as the biggest listed copper miner by volume in Asia, Barclays said.
The transaction, set to close by the autumn, is subject to regulatory approvals in China and Peru and a vote by MMG shareholders. China Minmetals, MMG’s majority shareholder, has “irrevocably committed” to vote in favor of the transaction.
The acquisition will be financed by a combination of equity and long-term debt facilities from a banking syndicate to be arranged by China Development Bank.
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