Freeport Americas Stake Said to Draw Citic Among Bidders

  • Company could sell 20% stake to fetch about $2 billion
  • Freeport has said selling core assets is a “balancing act”

China’s Citic Metal Co. is among parties that are holding talks with Freeport-McMoran Inc. to buy a minority stake in the miner’s North and South American operations, according to people familiar with the matter.

Freeport, which is holding bilateral talks with potential buyers, is also in discussions with at least one another investor group, the people said, asking not to be identified as the information isn’t public. The stake, which may comprise about 20 percent of Freeport’s assets in the Americas, could fetch about $2 billion, two of the people said. No final decision has been made and other suitors may also be interested in the unit, they said.

The assets have also previously drawn interest from sovereign wealth and Canadian pension funds, one of the people said.

Shares in Freeport fell 2 percent Friday to $11.11 a share as of 2:53 p.m. in New York.

A spokesman for Freeport declined to comment. Citic Metal, a subsidiary of Hong Kong-listed Citic Ltd., didn’t immediately respond to requests for comment. An external spokeswoman for Citic Ltd. said the company does not comment on market speculations.

A multibillion-dollar sale of a stake in some of the world’s biggest copper mines would cap a record year of disposals for the Phoenix-based miner. Chief Executive Officer Richard Adkerson is striving to contain debt racked up in the commodities boom when Freeport bet big on energy with a debt-funded acquisition of Plains Exploration & Production Co. just ahead of a downturn in crude prices.

Earlier this month, the Phoenix-based company agreed to sell its Tenke Fungurume mine in the Democratic Republic of Congo to China Molybdenum Co. for $2.65 billion. That followed news in February that it would sell a $1 billion stake in its Morenci mine in Arizona to Sumitomo Metal Mining Co.

To keep its debt unsecured, Freeport needed to announce $3 billion in asset sales by the end of the second quarter. Since the Morenci transaction was announced, Freeport bonds have returned 62 percent, three times the average gain among global metal producer bonds tracked by Bloomberg.

The company also said last week that it was withdrawing its registration to sell shares in its oil and gas business and folding the standalone unit back into the company and cutting a quarter of the energy workforce. Freeport said earlier in May it would pay Noble Corp. more than half a billion dollars not to use a pair of its drillships.

Freeport’s core Americas assets include Cerro Verde in Peru, El Abra in Chile and the Morenci mine in Arizona. The mines were acquired when Freeport bought Phelps Dodge Corp. in 2007.

At a mining conference in Miami following the Tenke sale, Adkerson made it clear the company is not done selling assets but said “it’s a balancing act,” in which Freeport must retain enough core mines to sustain the company in the future. At the time, he told analysts that Freeport was looking at selling a minority stake in a package of assets.

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