A Chinese consortium led by China Minmetals Corporation has said it will pay $5.85 billion for a giant Peruvian copper mine owned by Glencore Xstrata PLC. The group will also pay all development costs for the Las Bambas mine from the beginning of 2014 until the deal closes in September—costs that have already amounted to $400 million, according to the New York Times.
Through subsidiary MMG Limited, Minmetals will control a 62.5 percent stake in Las Bambas, while China state-owned firms Guoxin International Investment Corp. and CITIC Metal Co. will hold 22.5 and 15 percent stakes, respectively.
The Las Bambas copper mine is projected to produce 460,000 metric tons of copper a year when it opens in 2015. The new source will feed China’s appetite for copper, which remains robust, even as economic growth there slows. According to the General Administration of Customs, China imported 3.2 million tons of copper metal and 10.1 million tons of copper ore and concentration in 2013.
If approved by China’s Ministry of Commerce (MOFCOM) and MMG’s shareholders, the transaction should lead to final merger approval for Glencore International PLC, a Swiss commodities trader, and Anglo-Swiss mining company Xstrata. The two corporations formally merged in May 2013, after China’s MOFCOM granted its conditional approval. One condition was that Glencore sell one of four mines it owned in Peru, Papua New Guinea, the Philippines, and Argentina.
MOFCOM’s decision to attach conditions to the Glencore Xstrata merger was in large part the result of China’s position as a major market for the two companies. The review process took nearly 14 months, considerably longer than the time it took other approval bodies including the European Commission and the US Department of Justice.