Glencore Xstrata, one of the world’s largest diversified natural resource companies, is selling its Peruvian copper mine to a group of Chinese state-owned companies for $5.8 billion, The Wall Street Journal says. The consortium is led by MMG mining company controlled by China Minmetals.
The sale is expected to be completed in autumn, when the deal is approved by MMG’s shareholders and China’s Ministry of Commerce. Las Bambas copper project’s sale was the final condition set by the Chinese regulators for last year’s Glencore’s takeover of Xstrata. Moreover, it was agreed that the Ministry of Commerce sets the price.
According to analysts, the cost is not so impressive. Despite that, the project is supposed to be moneymaking for the Chinese. The copper mine is projected to produce 460,000 tons a year. That has been the largest foreign purchase of mining assets for Chinese companies since 2008, when Alunimum Corp. Chinalco bought a 12% stake in Anglo-Australian Rio Tinto for $14 billion.
China intends to fix its fast-growing economy with raw materials. The People’s Republic of China heads the world in terms of crude materials consumption. In particular, the country consumes 40% of total global copper output.