Glencore Xstrata seeks exit from Philippines copper project

Δημοσιεύθηκε: 30 Ιανουαρίου 2014 - 13:37

Glencore Xstrata is looking to sell its stake in a Philippines copper project, according to the commodities group's partner in the development.

The disposal of Tampakan would be more proof of Glencore's reluctance to embark on building many of the mine projects that it inherited with its takeover last year of Xstrata, a deal that created one of the world's most powerful resources groups spanning mining and trading of metals, oil and agricultural commodities.

Glencore favours investing in mines that are in operation or close to production, an approach that it says cuts risks and brings a rapid flow of commodities to feed its logistics and trading operations. It has said it sees little reason for more spending on "greenfield" developments such as Tampakan.

Ivan Glasenberg, Glencore's chief executive, has lambasted rival mining groups for overspending on projects. Many peers are also now ratcheting back capital spending, hoping to be able to generate better returns for investors.

Indophil, the Australian company that holds 37.5 per cent of Tampakan, said Glencore had told it of its intention to sell its own 62.5 per cent stake. "No formal divestment process has commenced," Indophil said. Glencore declined to comment. It had said it was reviewing Tampakan.

The copper mine project is one that Glencore could be forced to sell under the terms of a deal with Chinese authorities when it bought Xstrata. China's ministry of commerce first want Glencore to try to sell Las Bambas, a large Peruvian development with estimated investment of almost $6bn, where a sale process has already started. Minmetals, the Chinese group, is considered the likeliest buyer although the outlines of a deal have taken longer to be agreed than Mr Glasenberg had last year said was likely.

If a Las Bambas sale is not agreed by September China can select one of Tampakan or three other Glencore projects for it to sell as an alternative. Frieda River, one project on the list, was sold by Glencore last year for $125m.

Analysts at Investec noted that Tampakan was comparable to Las Bambas in terms of investment needed and copper output but said development had been hampered by a local law banning open-pit mining. "The Philippines is one of the more challenging jurisdictions in which to advance mining projects," they said.

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