Barry Fitzgerald | The Australian
SPECULATION that the Beijing-ordered sale by Glencore Xstrata of its $US6 billion ($6.7bn) Las Bambas copper project in Peru is imminent has placed ASX-listed companies PanAust, Highlands Pacific and Indophil on high alert.
The sale of Las Bambas — a condition of Chinese approval of last year’s merger between the London-listed Glencore and Xstrata — affects the plans of all three companies in their multi-billion-dollar copper/gold projects in Papua New Guinea (PanAust and Highlands) or in The Philippines (Indophil).
Merrill Lynch last week tipped that the sale of Las Bambas would be announced “any day”, with the market continuing to have Hong Kong-listed and Melbourne-managed MMG as the most likely buyer in a deal.
Its 72 per cent owner, China Minmetals Corporation (Minmetals) is one of China’s biggest multinational state-owned enterprises.
MMG is best known in this market for acquiring the assets of OZ Minerals other than the Prominent Hill copper-gold mine in South Australia, when it was forced into a drastic debt restructuring in 2007.
MMG’s operations include the Century zinc mine in Queensland, the Rosebery zinc operation in Tasmania and the Golden Grove base and precious metals mines in Western Australia.
MMG would not comment on the Las Bambas speculation on Friday.
MMG does not have the financial capacity to take on Las Bambas itself but Minmetals does, thanks to access to Chinese import/export financing.
MMG also recently deferred a development decision on its $US1.5bn Dugald River zinc project in Queensland.
In the meantime, PanAust, Highlands and Indophil are anxiously awaiting an outcome of the Las Bambas sales process.
In the case of PanAust and Highlands, the deal in which PanAust replaces Glencore in the proposed $US1.8bn modified development plan for the Frieda River copper/gold project in PNG hinges on Glencore meeting Beijing’s condition that it reaches agreement to sell the Las Bambas project before September 30 this year.
Should Glencore fail to complete the transfer of ownership by June 30 next year, the Chinese merger approval requires it put its 80 per cent stake in Frieda River up for auction.
PanAust has since struck a deal to acquire Glencore’s stake for $US75m as well as forming an alliance with the other partner, Highlands Pacific.
However, the deal remains conditional on Glencore meeting the Chinese condition on Las Bambas.
The Melbourne-based Indophil faces similar uncertainty, with Glencore also required to auction off its 62.5 per cent stake in the Tampakan copper/gold project in The Philippines should Las Bambas not be sold.
Glencore also owns a 13.1 per cent equity stake in Indophil. Indophil owns a 37.5 per cent interest in Tampakan.
Tampakan, like Frieda River, is one of the biggest undeveloped copper/gold orebodies in the world.
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