A Chinese consortium led by MMG Ltd., a unit of state-controlled China Minmetals Corporation, purchased a Peruvian copper mining project from commodities trading and mining giant Glencore Xstrata for US$5.85 billion.
The all-cash deal for Las Bambas, a long-life copper development project located in the South American country’s Cotabambas province in southern-central Apurímac region, is among China’s largest mining acquisitions in recent years.
The Chinese joint purchasing venture also included Guoxin International Investment Corporation and CITIC Metal Company. As part of the deal, the joint venture partners will assume responsibility for project capital expenditures from January 1, 2014.
According to an MMG media release, Las Bambas is one of the world’s largest copper projects currently under construction with a 10.5 million ton copper mineral resource and a 6.9 million ton copper ore reserve. The project is expected to enter production in 2015.
“Las Bambas is expected to produce in excess of 2 million tons of copper in concentrate in its first five years of operation,” MMG Chief Executive Officer Andrew Michelmore said in a media release. “We also believe there are opportunities to extend the existing resource and mine life as a significant proportion of the license area is currently unexplored.”
The deal is the largest Chinese purchase of an overseas mining asset since state-owned Aluminum Corporation of China bought a 12 percent stake in Anglo-Australian mining company Rio Tinto PLC for US$14 billion in 2008. The transaction is expected to close by the third quarter, subject to regulatory approval and a vote by MMG’s shareholders.
China is the world’s largest importer of copper, accounting for roughly 40 percent of global copper demand. The country is also the second largest producer of copper behind Chile, according to data by the United States Geological Survey.
Based in Beijing, China Minmetals is a major producer of zinc, and also mines copper, lead, gold and silver with operations in Australia, Laos, Africa, Asia and North America.
Headquartered in Baar, Switzerland, Glencore Xstrata is among the world’s largest global diversified natural resource companies, with more than 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities.