- EMR Capital, Sandfire Resources also study Australian asset
- Glencore follows other indebted miners in divesting operations
Zijin Mining Group Co., China’s most profitable gold producer, and OZ Minerals Ltd. are among companies weighing interest in an Australian copper mine that Glencore Plc is selling to cut debt, people with knowledge of the matter said.
EMR Capital Advisors Pty, a private equity firm led by former Rio Tinto Group executive Owen Hegarty, and Sandfire Resources NL have also spoken with advisers and are preparing to study information on the Cobar mine, said the people, asking not to be identified as the details are private. Glencore’s sales of the asset in New South Wales state, along with a larger project in Chile, could fetch as much as $1 billion combined, UBS Group AG analysts wrote in an Oct. 12 research report.
The Swiss commodity trader and producer is selling assets as it seeks to cut its $30 billion debt load by a third amid a rout in commodity prices. Chief Executive Officer Ivan Glasenberg said in September that Glencore could raise $2 billion from asset sales, including a minority stake in its agriculture unit and a precious metals streaming transaction.
The Cobar mine produces about 50,000 metric tons of copper concentrate a year, Baar, Switzerland-based Glencore said earlier this month. The company’s advisers at Bank of America Corp. and UBS have been contacting potential buyers for the project and plan to send out detailed information in the next several weeks, the people said.
Glencore shares fell 0.5 percent at 10:35 a.m. in London on Wednesday. Representatives for Glencore, EMR Capital, OZ Minerals and Sandfire declined to comment, while Australia-based representatives for Zijin didn’t immediately respond to requests for comment.
After Glencore unveiled its debt reduction plan last month, on Oct. 12 it added the sale of Cobar and the Lomas Bayas open-pit mine in Chile, which produces about 75,000 tons of refined copper a year. The addition of copper mine sales to the company’s debt plan has prompted analysts to predict the firm may exceed its target of raising $2 billion from asset disposals.
Copper has slumped 18 percent in London in this year, dropping in August to the lowest level since 2009 as slowing growth in China hurt demand. Kynikos Associates LP founder Jim Chanos said this month he was concerned that Glencore seemed to be buying things at the top of the market and selling them at the bottom. Chanos signaled he was betting against Glencore stock, which has lost more than 60 percent this year.
Glencore joins other major miners in paring assets, with Anglo American Plc agreeing in August to sell two Chile copper projects for as much as $500 million. Barrick Gold Corp. said in July it will sell its 50 percent stake in the Zaldivar copper mine to Santiago-based Antofagasta Plc for $1.01 billion.
Zijin is pursuing acquisitions overseas with a new urgency amid lower valuations in the mining sector, Chairman Chen Jinghe told Bloomberg Television in an interview aired last month. In May, it spent $710 million buying into mines in Papua New Guinea and the Democratic Republic of Congo.
OZ Minerals, owner of Australia’s biggest undeveloped copper deposit, said in July it’s conducting a global search to add new base metals assets. Perth-based Sandfire, which has a market value of A$979 million ($707 million), produces copper and gold from its DeGrussa mine in Western Australia.
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.