Glencore to sell copper mine for £3.5bn

Glencore Xstrata has sealed a $5.85bn (£3.5bn) deal to sell its Las Bambas copper mine in Peru to China.

The commodities giant has agreed to offload the project to a consortium led by MMG, a subsidiary of Chinese state-owned metals trader Minmetals. Citic Metal, another Chinese state-owned company, and Guoxin International Investment are also members of the consortium, which will pay for Las Bambas in cash.

The FTSE 100 company will use the proceeds of the deal to cut debt and said it would return any surplus capital to shareholders. Ivan Glasenberg, chief executive of Glencore, said the sale “demonstrates our commitment to maximising value for our shareholders” and described the consortium’s offer as “compelling”.

He added: “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.”

A disposal of Las Bambas, which is one of Glencore’s biggest mines, has been long awaited by investors. The company has been forced to sell the project to secure Chinese regulatory approval for its $35bn acquisition last year of copper miner Xstrata. Authorities were concerned about Glencore’s grip on the copper market.

China is a natural buyer for Las Bambas as the country is the world’s biggest metals consumer. Jiangxi Copper, the nation’s biggest smelter of the metal, was also in the running for the deal.

Las Bambas is due to start production next year and the acquisition is expected to close by the end of the third quarter.

The consortium has agreed to pay all of Glencore’s development costs on the mine between the start of 2014 and the deal’s completion. They had reached $400m by the end of March.

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