China yesterday approved the $76-billion merger between Glencore International and Xstrata after the commodities giant agreed to sell Xstrata's largest greenfield Las Bambas copper project in Peru.
The approval comes after the European and South African regulators approved the deal in November 2012 and early this year respectively.
Glencore yesterday said that after the acquisition, it would sell Las Bambas to a buyer approved by China's Ministry of Commerce by 15 September 2014 and continue to supply China with copper at the same rate as it and Xstrata collectively have done in the past two years.
The $5.2-billion Las Bambas copper project is located in Peru's Cotabambas and Grau Provinces and is said to hold reserves of around 1.710 billion tonnes.
The project consists of three open pit mines with initial life of 18 years. Construction of the mines had started in the first half of 2012 and is expected to start producing in fourth quarter of 2014.
Las Bambas will produce an average of 400,000 tonnes of copper in concentrate including significant gold, silver and molybdenum by-products.
The Chinese regulators were concerned on the merged entity's hold on global copper resources as both companies currently account for around 7 per cent of worldwide copper supply.
But its market share would increase significantly over the next decade if both companies go through with their planned investments in Chile, Peru, Australia, and in the African copper belt.
Xstrata, already the world's fourth-largest global copper producer, has projects under construction that will increase copper production by more than 50 per cent to 1.5 million tonnes per annum over the next three years.
The European Commission (EC) had also put modest conditions for approving the merger on condition that Glencore terminates its exclusive European zinc sales agreement with the world's top zinc producer Nyrstar.
Brussels-based EC said that it had concerns that the merged entity would have the ability and incentive to raise prices for zinc metal, an important input for many EU industries.
Glencore has since terminated its exclusive long-term off-take agreement with Nyrstar for a period of 10 years, and divested its 7.79 per cent stake in the Belgian company for €44.9 million.