Glencore Xstrata has sold its Peruvian copper mine project Las Bambas for US$5.85bn, after the Chinese government compelled it to do so following the merger of Glencore and Xstrata in 2013.
A consortium consisting of MMG Limited (62.5%), GUOXIN International Investment Corporation Limited (22.5%) and CITIC Metal (15.0%) has agreed to buy Las Bambas for the US$5.85 sale price, and will also pay Glencore Xstrata for all operational costs recorded at the project since January 1 this year, which so far amount to about US$400m.
Last year, Ministry of Commerce People’s Republic of China (MOFCOM) ordered Glencore Xstrata – listed on the Hong Kong stock exchange – to sell Las Bambas by September 2014, as a condition of the merger between Glencore and Xstrata.
MOFCOM ordered the sale to avoid the miner establishing too great a share of the world’s copper supply.
“In 2011, Glencore’s and Xstrata’s exports of copper concentrate to China accounted for 13.3% and 4.5% respectively of China’s total imports, or 17.8% on a combined basis,” MOFCOM said.
Las Bambas, which is in development to start production in 2015, would no doubt have added a healthy chunk to that percentage, and that was not something the Chinese regulator was comfortable with.
Despite having to find a buyer for Las Bambas under duress, Glencore Xstrata says the US$5.85bn price tag agreed to by the purchasing consortium was still an appealing one.
“Since we acquired Xstrata on 2nd May 2013, our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the Consortium,” said Glencore Xstrata chief executive Ivan Glasenberg.
“Our willingness to sell reflects the level of the offer and our conviction that we can utilise the sale proceeds to create additional shareholder value.”
Las Bambas is a long-life copper development project, which also includes prospective exploration options. It is located in the Cotabambas Province in the Apurimac Region of Peru, which is in the southern section of the country.
The mine will initially produce around 400,000tpa of copper, along with gold and silver by-products. Minerals will be transported from the project, by rail, to the nearby Matarani port.
Source from here