Glencore Xstrata expects four Chinese bidders for its $5-bn Peruvian copper mine
12 September 2013
The recently merged commodity and mining giant, GlencoreXstrata, expects as many as four Chinese companies to bid next week for its Peruvian Las Bambas copper project that is valued at more than $5 billion.
Ivan Glasenberg, the Baar, Switzerland-based company's chief executive, told reporters, "There will be at least three to four Chinese groups bidding. There is some other outside interest besides the Chinese consortiums."
According to some media reports, Chinalco Mining Corp, a subsidiary of China's state-run aluminum group, and Hong Kong-listed MMG Ltd - earlier known as Minerals and Metals Group, and Jiangxi Copper Co are expected to bid for Las Bamba, which expected to produce around 400,000 tons of copper a year.
Commodities giant Glencore has been forced to sell Xstrata's largest greenfield Las Bambas copper project in Peru as part of a deal with the Chinese regulators for approving its $76-billion merger with mining giant Xstrata. (See: $76-bn Glencore-Xstrata merger wins Chinese conditional approval)
Under the deal, Glencore had agreed to 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 Glencore and Xstrata had done collectively in the past two years prior to the merger.
The $5.9-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.
Glencore Xstrata yesterday revised the cost of development for the Las Bambas project by $740 million from $5.2 billion to $5.940 billion, of which $2.7 billion will be spent in 2014 and 2015 alone.
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.
At that rate of production, the output from Las Bambas would be close to that of Rio Tinto's Oyu Tolgoi mine under development in Mongolia and about half of BHP Billiton's Escondida mine in Chile.