Minmetals Group to Buy Glencore Copper Project for $5.85 Billion

A logo sits on a sign outside Glencore Xstrata Plc's headquarters in Baar, Switzerland.

A group led by a unit of China Minmetals Corp. agreed to pay Glencore Xstrata Plc (GLEN) $5.85 billion for the Las Bambas copper mine in Peru.

“Since we acquired Xstrata, our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the consortium,” Baar, Switzerland-based Glencore said today in a statement.

Buying Las Bambas gives the group led by Minmetals’s MMG Ltd. control of a mine that’s scheduled to produce 400,000 metric tons of copper a year from 2015, equivalent to 12.5 percent of 2013 imports of copper metal by China, the world’s biggest buyer. The sale also satisfies the final condition of Chinese regulators for Glencore’s $29 billion takeover of Xstrata Plc last year.

“China has to import 80 percent of its need for copper, which is massively used in infrastructure construction,” Heng Kun, an analyst with Essence Securities Co., said before the deal was announced. “Buying copper resources is a strategic move for China to secure the raw material supplies.”

Glencore said proceeds from the sale may be returned to investors.

MMG holds a 62.5 percent stake in the group buying Las Bambas. The consortium also includes Guoxin International Investment Corp., with a 22.5 percent stake, and Citic Metal Co., with 15 percent, Glencore said.

The deal is subject to approval by regulators and by MMG shareholders. Minmetals, which holds about 74 percent of MMG, has committed to vote in favor of the purchase, Glencore said.

To contact the reporters on this story: Jesse Riseborough in London atjriseborough@bloomberg.net; Dan Hart in Washington at dahart@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Andrea Snyder