MMG Ltd. (01208.HK), together with Guoxin International Investment Co. Ltd.’s unit and CITIC Metal Co. Ltd., has proposed to acquire Glencore Xstrata’s Las Bambas copper project in Peru for US$5.85 billion, the biggest deal by Chinese firms in the past few years.
Speaking at a teleconference on Monday, MMG chief executive Andrew Michelmore said the company is putting a lot of effort in the integration of the copper project into its system.
“We’ve set a timetable for completing that — that’s something like two months after we actually complete the transaction and get the keys to the operation,” Michelmore said, adding that the firm’s other merger and acquisition activities will be put on hold.
The deal is expected to be completed by the third quarter, he said. According to Glencore, the copper mine is 56 percent complete with a capacity to process about 140,000 metric tons of ore per day.
The project, with an expected life span of 20 years, will become one of the world’s top three copper mines by 2017, producing more than 2 million tons of copper concentrates in the first five years of operation.
MMG will be entitled to 73.75 percent of the Las Bambas copper concentrates while CITIC Metal will take 26.25 percent, MMG said. In terms of interest in the consortium, MMG will have 62.5 percent, Guoxin 22.5 percent and CITIC 15 percent.
The deal will be paid in cash and through bank financing. A syndicated facility from China Development Bank has been obtained, with Industrial and Commercial Bank of China Ltd. (01398.HK, 601398.CN) and Bank of China Ltd. (03988.HK, 601988.CN) participating in the arrangement. The proceeds will be used for acquisition as well as capital to develop the project.
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