Glencore Sees No Roadblock in $5 Billion Mine-Sale Talks
Glencore Xstrata Plc (GLEN) Chief Executive Officer Ivan Glasenberg said the world’s fourth-biggest mining company remains in talks with China Minmetals Corp. for an asset that’s been valued at more than $5 billion.
“There’s no roadblock in the talks,” the 57-year-old billionaire said in a phone interview in London, referring to a copper mine in Peru that Glencore offered 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 Minmetals is nearing an agreement to purchase Las Bambas for more than $5 billion, people with knowledge of the matter said last month. Proceeds from the sale may be returned to shareholders, Chief Financial Officer Steve Kalmin told reporters in September. Glencore today reported 2013 pro-forma adjusted net income of $4.58 billion.
“We continue to think the company could receive a good price for this asset,” Paul Gait, a mining analyst at Sanford C. Bernstein Ltd., 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 today.”
Glencore rose for the first time in nine days in London trading, advancing 1.7 percent to 331.85 pence by the close. The FTSE 350 Mining Index gained 1.2 percent.
Glencore is selling the Las Bambas mine as part of an agreement to win Chinese regulatory authorization for its $29 billion takeover of Xstrata Plc last year.
Minmetals has been to the mine and completed a detailed financial study of the operation, Glasenberg told analysts in London today. Talks are now focused on price, he said.
The Minmetals-led group of preferred bidders includes Citic Metal Co., a unit of state-controlled conglomerate Citic Group Corp., and China Reform Holding Corp., an investment company backed by the country’s state assets regulator, the people with knowledge of the negotiations said.
“We expect at least a portion of what should be about $5 billion of proceeds from a Las Bambas sale to be returned to shareholders via a special dividend,” Chris LaFemina, an analyst at Jefferies LLC, wrote in a report.
About $3 billion has been spent on the project so far. It is estimated to cost about $5.9 billion to complete, Glencore’s Kalmin said in September.
BMO Capital Markets Ltd. and Credit Suisse Group AG are advising Glencore on the sale. Bank of America Corp., Citigroup Inc. and Deutsche Bank AG are working with the Minmetals-led group, according to the people.
The world’s biggest exporter of power station coal is also in talks with Rio Tinto Group for a possible coal mining venture in Australia’s Hunter Valley coal region, he said. It remains in negotiations with Brazil’s Vale SA (VALE) on combining nickel operations in Canada’s Sudbury basin, he said.
The company has narrowed its search for a new chairman to just a few candidates and expects to appoint someone to the role before the May annual general meeting, Glasenberg said in the interview. He’s also continuing to search for a female board representative.
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore Xstrata.
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