Glencore ready to sell Peru asset

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br glencore Bloomberg Ivan Glasenberg, the chief executive of Glencore Xstrata, says it is holding out for the right price for the mine. Photo: Capitalvoice via Bloomberg

London - Glencore Xstrata remained in talks with a Chinese bidder for an asset that has been valued at more than $5 billion (R54bn), chief executive Ivan Glasenberg said yesterday.

“There’s no roadblock in the talks,” he said in London, referring to a copper mine in Peru that Glencore put up for sale last year. “We are in discussions with a potential buyer and if we can get the right price we will go ahead and sell it.”

A group led by China’s Minmetals was nearing an agreement to purchase Las Bambas for more than $5bn, people with knowledge of the matter said last month.

Proceeds from the sale might be returned to shareholders, chief financial officer Steve Kalmin said in September last year.

Yesterday Glencore reported pro-forma adjusted net income of $4.58bn for the full year.

“We continue to think the company could receive a good price for this asset,” Paul Gait, a mining analyst at Sanford C Bernstein, wrote in a report. “We see short-term upside to the stock from the potential for Glencore to report a successful sale of this asset.

“We were, however, slightly disappointed this was not announced [yesterday].”

Las Bambas is “a good asset, we still feel very comfortable with the asset”, Glasenberg said. “There is a leading bidder, the Chinese, that’s no secret; so we are continuing to have discussions with them.”

Glencore is selling Las Bambas as part of an agreement to win Chinese regulatory authorisation for its $29bn takeover of Xstrata last year.

The leading Chinese group included Citic Metal, a unit of state-controlled conglomerate Citic Group, and China Reform, an investment company backed by the state assets regulator, the people said.

“We expect at least a portion of what should be about $5bn of proceeds from a Las Bambas sale to be returned to shareholders via a special dividend,” Chris LaFemina at Jefferies wrote in a report.

About $3bn had been spent on the project so far. It would cost about $5.9bn to complete, Kalmin said in September. – Bloomberg


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