Chinese to Buy Mine in Peru

By Gough, Neil | International New York Times, April 15, 2014 | Go to article overview

Chinese to Buy Mine in Peru


Gough, Neil, International New York Times


Glencore Xstrata said it would sell its Las Bambas copper mine to a group of state-owned Chinese companies.

A consortium of state-owned Chinese companies led by the China Minmetals Corporation, one of China's biggest metals miners, on Monday announced an agreement to buy a giant copper mine in Peru from Glencore Xstrata for more than $6 billion.

In a deal that demonstrates how Chinese regulators are influencing global mergers and acquisitions far beyond China's borders, Glencore said it would sell its Las Bambas copper mine project to the Chinese group for $5.85 billion in cash plus development costs. The sale of the mine was a top condition stipulated last year by the Chinese Ministry of Commerce before it approved the $30 billion purchase by Glencore International, a Swiss commodities trader, of the mining company Xstrata.

MMG Limited, a China Minmetals subsidiary that is listed in Hong Kong, leads the buyers' consortium with a 62.5 percent stake. The Guoxin International Investment Corporation, a state-owned infrastructure and resources company, has a stake of 22.5 percent, while Citic Metal, the metal trading unit of the state-owned conglomerate Citic Group, owns 15 percent.

In addition to the $5.85 billion price, the buyers have agreed to cover all costs of developing the mine between the start of this year and the formal closing of the transaction, which is expected to take place by the end of September -- a deadline imposed by Chinese regulators. Glencore said that so far those expenses amounted to $400 million in the first quarter of this year.

The Chinese Commerce Ministry, which enforces the country's antimonopoly law, took more than a year before approving the merger of Glencore with Xstrata in April 2013. Citing antitrust concerns, the regulator ordered the divestment of the Las Bambas project, an open-pit mine in the advanced stages of construction that is expected to have initial production of two million tons of copper per year.

In addition, the Commerce Ministry required Glencore to agree to guarantee the supply of copper, zinc and lead to Chinese companies through 2020 by signing long-term supply contracts. …

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