(Reuters) – Glencore Xstrata Plc has sold its interest in the Las Bambas copper mine in Peru to a Chinese consortium in a $5.85 billion cash deal, making it one of China’s biggest mining acquisitions in recent years.
The commodities trader said yesterday it had sold its interest to a consortium owned 62.5 percent by the Hong Kong-listed MMG Ltd, 22.5 percent by Guoxin International Investment Corp Ltd and 15.0 percent by Citic Metal Co Ltd.
Glencore agreed to sell Las Bambas to secure approval from China’s competition authorities for its takeover of miner Xstrata because Beijing feared the merged group would have too much power over the copper market.
Las Bambas, one of the largest mines in Xstrata’s project portfolio, is scheduled to begin production in 2015.
Glencore will receive about $5.85 billion in cash upon completion of the deal. In addition, all capital expenditure and developmental costs since the beginning of the year until closing of the deal will also be payable by the consortium.
Capital expenditure and other costs incurred since the start of the year were about $400 million as of March 31.
Glencore said proceeds from the sale will “immediately and materially” deleverage its balance sheet.
The deal, which is expected to close prior to the end of the third quarter, is subject to approval from China’s Ministry of Commerce (MOFCOM) as well as approval from MMG’s shareholders.
China Minmetals Non-Ferrous Metals Co Ltd, which holds about 74 percent of MMG, has agreed to vote in favour of the deal, Glecore said.
Glencore said it would continue to look for opportunities to reinvest capital and any surplus would be returned to shareholders.
BMO Capital Markets and Credit Suisse advised Glencore on the sale.