Minmetals Said to Be Near Deal to Buy Glencore’s Bambas Mine

Feb 07, 2014 3:49 am ET

(Updates share price to Hong Kong close in fifth paragraph.)

Feb. 7 (Bloomberg) -- A group led by China Minmetals Corp. is nearing an agreement to purchase Glencore Xstrata Plc’s Las Bambas copper project in Peru for more than $5 billion, according to people with knowledge of the matter.

A deal between Minmetals, China’s biggest state-owned metals trader, and Glencore could be announced as early as this month subject to Chinese government approval, said the people, who asked not to be identified as the process is private. The asset could fetch closer to $6 billion, one of the people said.

The Chinese group includes Citic Metal Co., a unit of state-controlled conglomerate Citic Group Corp., and China Reform Holding Corp., an investment company backed by the country’s state assets regulator, the people said.

Baar, Switzerland-based Glencore is selling the Las Bambas mine as part of an agreement to win Chinese regulatory authorization for its $29 billion takeover of Xstrata Plc last year. Companies in China, the world’s biggest copper consumer, are seeking to take advantage of commodity price declines to buy assets overseas.

Glencore shares rose as much as 4.2 percent in Hong Kong, the most in more than seven months, before ending 2.9 percent higher. The company’s London-traded shares extended gains yesterday after Bloomberg News reported Minmetals was close to a deal, rising as much as 3.3 percent.

A spokesman for Glencore declined to comment. He Jinglin, a media-relations official at Minmetals, didn’t answer two calls to his mobile phone.

Sole Bidder

The Minmetals group was the sole Chinese bidder left after a consortium led by Aluminum Corp. of China abandoned its offer for Las Bambas in November, people with knowledge of the matter said then. Chinalco, as the state-owned aluminum producer is known, decided to withdraw after rejecting a proposal by the Chinese government that it be a minority partner in a combined bid led by Minmetals, according to the people.

China required Glencore to sell Las Bambas to limit its power over the global copper market. Led by billionaire Chief Executive Officer Ivan Glasenberg, Glencore is now the world’s fourth-largest mining company following the Xstrata takeover.

A deal valued at $5 billion would be almost the largest mining-related acquisition by a Chinese buyer, according to data compiled by Bloomberg, second only to the $12 billion purchase of a stake in Rio Tinto Group completed by Chinalco in partnership with Alcoa Inc. in 2008.

BMO Capital Markets Ltd. and Credit Suisse Group AG are advising Glencore on the sale. Bank of America Corp., Citigroup Inc. and Deutsche Bank AG are working with the Minmetals-led group, according to the people.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore.

--With assistance from Michelle Yun in Hong Kong. Editors: John Viljoen, Alex Devine