Glencore inherited the Tampakan stake as part of its takeover
of Xstrata, but agreed to offer the project up for a
possible sale by auction as one of the conditions imposed
by China’s Ministry of Commerce in its approval of
the Xstrata deal.
Under Mofcom’s terms, if Glencore fails
to agree a deal for the sale of the Las Bambas copper
project in Peru, it must nominate a trustee to sell one of four
copper projects – Tampakan, Frieda River, El Pachon or
Alumbrera – by auction with no minimum reseve
In November, Glencore announced plans to sell its 80% stake in
to PanAust, subject to Mofcom approval, in a
deal that suggested it was confident it would find an
attractive bid for Las Bambas.
"Glencore Xstrata has informed Indophil of its preference to
divest its stake in Tampakan," Indophil told investors on
Thursday January 30.
"This is consistent with Glencore’s preference to
not develop greenfield projects, and its publicly announced
plan to sell its interests in the Las Bambas copper project in
Peru and … Frieda River," it said.
China Minmetals’ majority-owned subsidiary MMG has
been considered the front-runner to buy Las Bambas, but the
multibillion-dollar project has also attracted interest from a
consortium comprising Teck, Newmont Mining, Blackstone and
Magris Resources, according to media reports.
The move to divest Frieda River and Tampakan suggests the sale
of Las Bambas is entering its final stages. Under the Mofcom
agreement, a sale must be announced before September 30.
Investec estimates the ungeared value of the Las Bambas mine at
$6.2 billion, the asset management group said on Thursday
that Glencore may struggle to find a buyer willing to
pay that price for the asset.
"If an acquirer were to spend $6 billion for the asset, it
would need access to close to US$10bn to get Las Bambas into
production, not a small figure by any measure," Investec said.
"We believe that there are very few companies globally with the
resources to afford this, particularly when major miners are
typically focussing on capex reductions and reducing leverage,"
the analysts said.
Investec assumes a sale price of $4.5 billion in its valuation
of Glencore, which it has a sell rating on.
Glencore declined to comment on the status of the Las Bambas