Glencore Xstrata Plc made an official statement, revealing that it has reached an agreement with a Chinese consortium led by MMG Ltd, over the acquisition of its Las Bambas copper project located in Peru in an all-cash deal estimated to 5.85 billion dollars. This is one of the latest and biggest mining purchases of China.
The deal is expected to be finalized by the autumn of this year. It also needs to be approved by the Chinese regulators, including the Chinas Ministry of Commerce, and will be subjected to a vote by the shareholders of MMG Ltd, which is an offshore division of China Minmetals Corp. that holds about 73% of the subsidiary. The price of the acquisition amounts to about 5.85 billion dollars in cash that would be paid to Glencore Xstrata Plc. The Chinese consortium that is to acquire the Las Bambas copper project will also cover all expenditure and development costs since the beginning of 2014.
Mr. Ivan Glasenberg, the Chief Executive Officer of Glencore Xstrata Plc said in a statement, which was cited by the Wall Street Journal: “Todays announcement demonstrates our commitment to maximizing value for our shareholders.” Mr. Glasenberg also explained: “Our willingness to sell reflects the level of the offer and our conviction that we can utilize the sales proceeds to create additional shareholder value.”
Other partners in the Chinese consortium are Guoxin International Investment Corp. Ltd and Citic Metal Co. Ltd. The transaction is said to provide the consortium with control of the Peruvian copper mine, which is projected to generate 400 000 metric tons of copper a year from 2015. Such a production equals to about 12.5% of the copper metal imports of China for last year.
One of the analysts, who work for Macquarue Group Ltd – Mr. Jeff Largey commented the announcement of the deal in a Bloomberg telephone interview: “It’s a good price, probably toward the top end of market expectations. This is a Chinese buyer, buying a very high quality copper asset.”
Glencore Xstrata Plc rose 0.96% to trade at 313.15 GBX, marking a one-year change of -9.02%. The company has a market capitalization of 41.5 billion pounds.
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