MMG Said Among Firms Eyeing $2 Billion Freeport Mine Stake

  • Freeport said in talks to sell 56% stake in Tenke copper mine
  • Company needs to sell $3 billion of assets by end of June

MMG Ltd., the publicly traded unit of China’s biggest state-owned metals trader, is among companies in talks to buy a majority stake in Freeport-McMoRan Inc.’s copper mine in the Democratic Republic of Congo, according to people with knowledge of the matter.

Freeport, the biggest publicly traded copper miner, is considering a sale of its 56 percent stake in the Tenke Fungurume asset, which may fetch more than $2 billion, the people said, asking not to be identified because talks are private. The mine could also attract interest from other parties including Chinese companies, such as Citic Metal Co., the people said. The talks are ongoing, and there’s no certainty an agreement will be reached, they said.

Freeport “continues to advance discussions for the sale of certain interests in its mining and oil and gas assets to accelerate its debt reduction initiatives,” the company said in an e-mailed statement, declining to comment further.

A spokeswoman for MMG declined to comment. Representatives for Citic didn’t immediately respond to an e-mailed request for comment outside of regular business hours.

Freeport rose 6 percent to $11.96 in New York Stock Exchange trading at 12:40 p.m. after earlier gaining as much as 7.4 percent. The shares have gained 76 percent this year.

Asset Sales

Freeport is required to alert its partner in the mine, Lundin Mining Corp., once a formal bid is on the table, which hasn’t happened so far, the Canadian company’s Chief Executive Officer Paul Conibear said in an interview. Lundin also has the right to match any offer for a stake in Tenke, though Conibear said the company is happy with its holding.

Freeport Chief Executive Officer Richard Adkerson said in January that any operation, in full or in part, could be sold as the Phoenix-based company seeks to reduce a debt load that stood at $20 billion at the end of 2015. Adkerson said last month he expected to agree to another $1.6 billion of divestments by the end of June, bringing the 2016 total to $3 billion.

Freeport needs to raise that sum by the end of the quarter to avoid having to provide collateral for its revolver and term loan, according to its first-quarter earnings report. The producer of gold, silver and copper agreed in February to sell a 13 percent stake in the Morenci mine in Arizona to Sumitomo Metal Mining Co. for $1 billion. Freeport is also trying to sell 10 percent to 20 percent of its North and South American operations, a person familiar with the matter said last month.

Tenke is one of Freeport’s five so-called core mines, which also include Cerro Verde and Morenci, as well as El Abra in Chile and Grasberg in Indonesia. Canada’s Lundin owns 24 percent of Tenke, while Gecamines, the Democratic Republic of Congo’s state-owned copper producer, holds 20 percent, according to Freeport’s website.

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