Miner and commodities trader Glencore PLC has agreed to buy a further stake worth at least US$531 million in Peru’s largest zinc miner, Volcan Compania Minera SAA, the company said on Tuesday.
Glencore, which has been a shareholder in Volcan since 2004 and holds a 7.68 economic interest, said it was buying at least 26.73 percent of the voting shares.
The price of zinc hit 10-year highs for a second day on Tuesday as worries over production outages in China pushed up prices.
The Lima stock exchange suspended trade in Volcan’s shares following the deal.
“Volcan’s operations are located in the richest polymetallic production area in Peru, producing some of the highest quality zinc concentrates,” Glencore said in a statement. “The transaction will provide an increase and extension of Glencore’s zinc production profile and the opportunity for synergies with Glencore’s existing Peruvian zinc operations.”
Following the purchase, which will be implemented under Peruvian law via a tender offer for up to 48.19 percent of Volcan’s class A common shares, Glencore will have an economic interest in Volcan of between 18.98 percent and 28.07 percent, the company said.
The total consideration payable by Glencore would be between US$531 million and US$956 million, depending on the level of acceptances. It is to be paid out of existing cash resources and should be completed this year.
Glencore has said it is focusing on strategic acquisitions, especially near existing resources, which will create synergies.
Although the mining industry has recovered from the commodity price crash that began in 2015 and extended into last year, the mood remains cautious and Glencore said its deal-making would limit its levels of debt to ensure an investment grade credit rating.
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