Chinese firms mull offer for Glencore mine

 
City A.M. Reporter
TWO CHINESE state-backed companies are among the bidders for Glencore Xstrata’s Peruvian copper mine which is valued at around £3.3bn, it emerged yesterday.

Chinalco Mining Corporation International and Hong Kong-listed MMG are not the only firms considering offers for the Las Bambas mine, which is in the Cotabambas and Grau Provinces.

Both companies are in talks with banks to advise them on bids, although no banks have been appointed yet, according to sources.

The mining industry giants agreed to sell the mine, which is scheduled to produce a minimum of 440,924 tonnes a year, in order to comply with Chinese antitrust requirements back in April on the completion of Glencore’s £23bn acquisition of Xstrata.

The interest from Chinese state companies in the mine appears to be a case of an asset sale forced by a government as a condition of merger approval working in favour of its own national champions.

Glencore has hired BMO Capital Markets and Credit Suisse to advise on the process, but no deadlines have been set, said the sources.

Under Glencore’s agreement with the Chinese regulator, it must get a binding sale and purchase agreement by the deadline and have a transfer of ownership by the end of June 2015, or it has the option to sell other project sites.

“The deal is very clever in terms of remedies as Glencore has agreed to sell an asset which isn’t producing well – Las Bambas – rather than dispose of more profitable assets in Britain,” Michael Rawlinson, analyst at Liberum Capital, told City A.M. at the time of the agreement.

Combined, Glencore and Xstrata account for roughly seven per cent of global copper supply. A Glencore spokesperson declined to comment on the progress of the sale. Glencore Xstrata’s shares closed 0.05 per cent lower at 326.4p yesterday.