Glencore expects Chinese bidders for copper mine in Peru

September 11, 2013

Glencore Xstrata chief executive officer Ivan Glasenberg said he expects the sale of the Las Bambas copper mine in Peru to attract bids from three or four Chinese bidders, and that the value of the property will be in the range of $5 billion, Bloomberg reported.

“There are groups forming together and combining,” Glasenberg told reporters in London. “We see there will be at least three to four groups bidding. There is some other outside interest besides the Chinese consortiums.” A first round of bids is due in September.

Chinese companies, including Chinalco Mining Corp. International, MMG Ltd. and Citic Resources Holdings Ltd., are among those studying offers for Las Bambas, people with knowledge of the process told Bloomberg. Glencore, based in Baar, Switzerland, is selling the mine as part of an agreement to win Chinese regulatory approval for its $29 billion takeover of Xstrata Plc this year.

The National Development and Reform Commission, China’s top economic planning agency that approves all major overseas acquisitions, usually restricts state-owned companies from making rival offers.

“We understand the NDRC sometimes doesn’t allow them to compete, but I think the interest that we’ve seen in China is very robust,” Glasenberg said. “There is very strong interest from some big major groups and they are not in the consortium, so it seems that they are going to compete."

BMO Capital Markets and Credit Suisse Group AG are advising Glencore on the sale. Las Bambas could be valued at more than $5 billion.

Proceeds from the sale may be returned to shareholders, Chief Financial Officer Steve Kalmin told reporters. About $3 billion has been spent on the project so far. It’s estimated to cost about $5.9 billion to complete, he said.

The Las Bambas mine is scheduled to produce 400,000 metric tons of copper a year starting in 2015 for at least the first five years. Xstrata said in January it was building the project at a cost of $5.2 billion. 

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