Glencore International received approval of its $30 billion takeover of Xstrata from the Chinese government after Glencore agreed to sell Xstrata’s Las Bambas Mine copper mine in Peru.
China asked for the concession so that the merged company would not have as tight of hold on the global copper supply.
The combined mining and commodities trading company would be one of the world’s largest producers of copper, and the Chinese authorities had been worried that its local companies might face higher prices for a variety of metals.
The Las Bambas mine in Peru had been expected to be sacrificed to secure the approval of China's Ministry of Commerce, but Glencore also agreed 8-year commitments covering the supply of copper, zinc and lead to China, Reuters reported.
Chinese regulators have rarely demanded asset sales to improve competition after a major tie-up, but the importance of the metals that Glencore mines and trades for China’s economy meant the merger was unlikely to go through without changes.
In particular, Glencore had already signalled that Chinese authorities were focused on its hold on the copper market, and specifically copper concentrate. Glencore and Xstrata combined account for roughly 7 percent of global copper supply.
Glencore, which is now on track to complete the industry’s biggest ever deal in two weeks, has to begin the process of selling Las Bambas within three months, and find a buyer by the end of August 2014.
If it does not find a buyer for the asset - a major mine expected to produce an annual 400kt (440,000 st) of copper for at least four years from 2015 - it will have to find alternatives.
Glencore, which has made no secret of its desire to slash the number of Xstrata mines being built from scratch, will have three months to offer up one of the miner's longer-dated projects instead - namely Tampakan in Peru, Frieda River in Papua New Guinea, El Pachon or Alumbrera in Argentina.
Satisfying China's appetite for concentrate, an intermediate product that feeds refineries and smelters, Glencore agreed to supply a minimum of 900 kt (990,000 st) of copper to Chinese clients a year for 8 years from 2013. The price for at least 200 kt (220,000 st) will be priced in accordance with the benchmark level.
Glencore also agreed to supply zinc and lead concentrate on "fair and reasonable" terms.