Glencore Xstrata International Plc (GLEN), the world’s biggest publicly traded commodities supplier, is working with Bank of America Corp. to find buyers for its stake in a copper and gold project in Papua New Guinea, a person with knowledge of the matter said.
The Baar, Switzerland-based company hasn’t made a final decision to sell the Frieda River project, said the person, asking not to be identified because the information is private.
Frieda River was being developed by Xstrata Plc, which Glencore acquired in May. Glencore now owns about 82 percent of the project, according to its website. Highlands Pacific Ltd. (HIG), which owns the rest, said last week that Glencore is continuing the sale process and that the PNG government is interested in taking over the project. Xstrata initially announced plans to sell all or part of Frieda River in June last year.
A spokesman for Glencore declined to comment on its plans for the mine.
Xstrata has estimated the cost of building the Frieda River project at $5.2 billion. If developed, Frieda River is projected to produce 204,000 metric tons of copper and 305,000 ounces of gold over a 20-year mine life, according to the project’s website. Glencore has yet to decide whether to continue developing Frieda River.
Frieda River is one of four mines that Glencore could sell if it is unable to divest the Las Bambas copper mine in Peru by Sept. 30 next year, under an agreement with China’s Ministry of Commerce in April. The other three are Tampakan in the Philippines and El Pachon and Alumbrera in Argentina.
Glencore agreed to sell Las Bambas to secure China’s approval of the Xstrata takeover.
Glencore, which added coal, copper, zinc and nickel mines to its commodities trading operations with the Xstrata takeover, joins companies including BHP Billiton Ltd. (BHP) and Rio Tinto Plc (RIO) in evaluating assets for divestment and rationing capital spending after a slump in commodity prices crimped margins.
Melbourne-based BHP sold its Pinto Valley copper mine and railroad in the U.S. to Capstone Mining Corp. (CS) in April for $650 million. Rio last month sold its Eagle nickel and copper project in Michigan to Lundin Mining Corp. (LUN) for $325 million.
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