Glencore Xstrata signs 5.85bn-dollar deal to sell Las Bambas

14th Apr 2014 07:02

After months of negotiations, commodities trader and mining giant Glencore Xstrata has finally reached an agreement to sell its Las Bambas copper project in Peru.Las Bambas is being sold for $5.85bn to a consortium 62.5%-owned by MMG, a subsidiary of state-owned China Minmetals Corp, 22.5% by GUOXIN International Investment Corporation and 15% by CITIC Metal Co.The disposal was initially agreed by Glencore at the time of its merger with Xstrata in May 2013 in an effort to win approval from Chinese regulators.Proceeds, payable in cash on completion, will "immediately and materially de-gear Glencore's balance sheet", the company said. It will then look for opportunities to reinvest capital in line with its strategy. Any surplus capital, subject to Glencore maintaining an efficient balance sheet within its credit rating guidance, will be returned to shareholders "within an appropriate time frame and structure".The company said that the consortium will also pay all capital expenditure and other costs incurred in developing Las Bambas since the start of the year, equal to $400m."Today's announcement demonstrates our commitment to maximising value for our shareholders. 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," said Ivan Glasenberg, Chief Executive."Our willingness to sell reflects the level of the offer and our conviction that we can utilise the sale proceeds to create additional shareholder value."The deal, subject to certain regulatory approvals, is expected to complete in the third quarter of this year.BC