Chinese-owned and Melbourne-based miner MMG Ltd is completing the $US5.85 billion purchase of Glencore Xstrata’s Las Bambas copper mine in Peru.
On April 14 MMG announced that it had entered into a Share Purchase Agreement with Glencore Xstrata as part of a joint venture to acquire Las Bambas. The MMG-led Hong Kong JV consists of MMG as the operator (62.5%), a wholly-owned subsidiary of Guoxin International Investment Co (22.5%) and CITIC Metal Co (15%).
Las Bambas in Cotabambas, Apurimac region, Peru is one of the world’s largest copper projects under construction with a 10.5 million tonne copper mineral resource at a 0.62% copper grade and a 6.9 million tonne copper ore reserve @ 0.73% copper. Las Bambas is expected to operate for more than 20 years with upside potential from associated unexplored tenements.
The purchase of Las Bambas mine ends a long saga that has drawn out completion of the merger between mining giants Glencore and Xstrata. Chinese authorities had refused to approve the merger unless Las Bambas was sold to Chinese entities, in a bid to prevent the merged entity dominating the copper market.
Funds for the acquisition will be sourced through equity and debt, with assistance from China Development Bank.
The transaction will also help resolve other deals, with PanAust’s desire to purchase Glencore Xstrata’s 80% stake in the giant Frieda River mine in Papua New Guinea also unable to proceed until the Las Bambas issue was resolved. ASX-listed Highlands Pacific has a 20% stake in Frieda River.
MMG is led by Australian Andrew Michelmore as CEO and operates the Rosebury mine in Tasmania as well as the Century mine in Queensland and the Sepon Copper Project in Laos.
Andrew Michelmore has described the acquisition as ‘transformational’ for MMG. “The addition of Las Bambas to MMG’s international portfolio delivers on our growth strategy and vision – to build a global diversified minerals and metals company and create opportunities for all stakeholders – including our shareholders, employees and communities.”