Tue, Apr 15, 2014 - Page 15 News List

Chinese group to buy mine in US$5.85bn deal

ECONOMIC OUTREACH:A consortium of state-run firms continues Beijing’s overseas shopping spree with a Peruvian mine held by Glencore Xstrata PLC


A group of Chinese state-owned companies is buying a Peruvian copper mine from Glencore Xstrata PLC for US$5.85 billion, adding to a wave of Chinese resource acquisitions abroad.

Glencore, based in Switzerland, said on Sunday it signed an agreement to sell its entire interest in the Las Bambas copper mine to a consortium led by MMG Ltd (五礦資源), a mining company controlled by state-owned China Minmetals Nonferrous Metals Co (五礦有色金屬).

The other buyers are Guoxin International Investment Corp (國新國際投資) and Citic Metal Co (中信金屬), also state-controlled.

“The Las Bambas project is in line with the long-term strategy of Minmetals and MMG,” Minmetals president Zhou Zhongshu (周中樞) said in a statement. “[The acquisition] will further optimize the mining asset composition of Minmetals.”

The deal is expected to close in the third quarter of this year, pending approval by governments and shareholders, Minmetals said.

The statement also said that lenders including the China Development Bank (國家開發銀行), Industrial and Commercial Bank of China (中國工商銀行) and Bank of China (中國銀行) will provide funding support for the takeover.

The agreement also requires the buyers to reimburse Glencore for the cost of developing the copper mine from the start of the year until the sale closes. In the first three months of the year, those costs were about US$400 million, according to Glencore’s statement.

The Peruvian purchase adds to a multibillion-dollar string of foreign acquisitions by China’s government-owned energy and mining companies, which hope to profit from future demand.

Earlier this month, Chinese state-owned grain giant COFCO Ltd (中國糧油集團) said, pending regulatory and shareholder approvals, that it would take a majority stake in the agricultural commodities subsidiary of Hong Kong-based Noble Group Ltd.

COFCO previously revealed a deal in late February to buy 51 percent of Netherlands-based Nidera BV, a trader of grains and soybeans among other agricultural commodities and active in Brazil and Argentina.

Last year, Chinese mining and energy acquisitions abroad totaled US$29.8 billion, according to Dealogic, a financial information firm. They included China National Petroleum Corp’s (中國石油天然氣) US$4.2 billion purchase of an interest in an oilfield in Mozambique from Italy’s ENI SpA.

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