GLENCORE Xstrata yesterday announced that it has started the sale process for its Peruvian copper mine Las Bambas, as demanded by the Chinese antitrust regulator back in April in return for merger approval.
“Glencore Xstrata has received numerous expressions of interest in the Las Bambas project from a diverse group of international mining companies and potential investors,” said the newly combined miner-trader.
Chinese state-backed groups are believed to be weighing rival bids for the asset, which broker Killik & Co thinks will raise in excess of $6bn (£3.97bn) for Glencore.
“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, director at Liberum Capital, told City A.M. at the time of approval from the Ministry of Commerce of the Peoples’ Republic of China (Mofcom).
The Las Bambas mine – which has over 10.5m tonnes of copper resources – must be sold to a purchaser approved by Mofcom before 30 September 2014, with completion to occur by 30 June 2015.
If Glencore fails to sell the asset in time, it will have to auction off one of four other copper assets: Tampakan in the Philippines, Alumbrera or El Pachon in Argentina, or Frieda River in Papua New Guinea, with no minimum price.
Glencore also announced this week that it will be halting production of iron ore in Australia from next month, citing deteriorating market conditions.
Glencore’s shares closed one per cent higher at 264.55p.
ADVISERS GLENCORE XSTRATA
BMO CAPITAL MARKETS
BMO Capital Markets and Credit Suisse are advising Glencore Xstrata on the Las Bambas sale. Jeffrey Couch and Gary Mattan are the managing directors leading the BMO team. Mattan has worked on over £16bn worth of deals, the vast majority of which are in the mining sector. Previous advisory work includes Glencore Xstrata’s £304m bid for oil refinery the Saudi Aramco Mobile Refinery Company (Samref) last year, Eldorado Gold Corporation’s £1.5bn offer for European Goldfields and Kinross Gold Corporation’s £3.9bn bid for Red Back Mining in 2010.
The Credit Suisse team is headed up by managing directors Mark Echlin and Pierre Lescastereyres. Echlin worked on the recent attempted takeover bid for troubled miner ENRC and on Glencore’s London IPO back in 2011. Lescastereyres has worked at Credit Suisse for 13 years and was educated at ESSEC Business School in France.
RLMFinsbury are advising on public relations matters. The team is headed up by Guy Lamming and Dorothy Burwell. Burwell leads the natural resources team and has previous experience in M&A, IPO and corporate finance advisory at Goldman Sachs.