China’s state-owned Minmetals has finally bought the Las Bambas copper mine in Peru for just short of $6bn. The asset, that could become the world’s third copper mine in a couple of years, had to be sold to get Chinese regulatory approval for Glencore’s takeover of Xstrata, Las Bambas’ owner up to now. There had been talk at some point of an almost unheard-of competition for the mine between Minmetals, Chinalco and even Jiangxi Copper, but the issue was resolved within Chinese state structures and only Minmetals was left to bid unopposed.
The much anticipated showdown between the Chinese state’s copper giants bidding for Glencore Xstrata’s Las Bambas site in Peru won’t be happening after all. Or the competition did take place, but in the form of lobbying within state structures. Unnamed sources quoted by Reuters say Chinalco, one of the two top contenders, will not bid for the project, leaving Minmetals as the front runner, presumably with the blessing of the National Development and Reform Commission. Jiangxi Copper, written about in this blog mostly because of their pioneering activities in Greenland, were at some point also said to be bidding for the Peruvian mine, but now it looks like competition between state-owned companies will be prevented. Talk has emerged today of a possible non-Chinese bid, by a group including Newmont and Canada’s Teck Resources. The asset is being sold at all in order for Chinese regulators to approve the takeover of Xstrata by Glencore.
Earlier reports made it unclear whether Jiangxi Copper, China’s largest smelter of the metal, was still on the race to get hold of Glencore-Xstrata’s Las Bambas asset in Peru, but Peruvian media now quote mining minister Merino as asserting that they are indeed bidding. This means no less than three Chinese state-owned miners (Chinalco and Minmetals being the other two) will be competing for the project, worth perhaps $6bn.
Peru’s minister of mines Jorge Merino, in China for a few days, is to meet with Chinalco and Minmetals officials. Both companies are bidding to buy Glencore’s Las Bambas copper mine. A third state-owned metals giant, Jiangxi Copper, had also shown interest, though it’s less clear if it’s still being considered. The minister will still meet with them anyway, perhaps to talk about their other activities in the country. Remarkably enough, at least two state-owned Chinese companies are competing for a project, which isn’t often the case.
Glencore has been told by Chinese regulators to dispose of Las Bambas, worth perhaps almost $6bn, as a condition for their approval of the takeover of Xstrata. All three companies already have operations in Peru.
I wrote a few months ago about Jiangxi Copper’s interest in a Greenland mine, a project that isn’t making much news at the moment.