China’s MMG among firms eyeing US$2 billion stake in Congo copper mine

US miner Freeport-McMoRan looking to offload assets

PUBLISHED : Sunday, 08 May, 2016, 6:19pm
UPDATED : Sunday, 08 May, 2016, 6:19pm

MMG, the publicly traded unit of China’s biggest state-owned metals trader, is among companies in talks to buy a majority stake in Freeport-McMoRan’s copper mine in the Democratic Republic of Congo, sources said.

Freeport, the biggest publicly traded copper miner, was considering a sale of its 56 per cent stake in the Tenke Fungurume asset, which may fetch more than US$2 billion, the sources said. The mine could also attract interest from other parties including Chinese companies, such as Citic Metal, they said. The talks were ongoing, and there was no certainty an agreement would be reached, they added.

Freeport “continues to advance discussions for the sale of certain interests in its mining and oil and gas assets to accelerate its debt reduction initiatives”, the company said in an e-mailed statement, declining to comment further.

Helped by its state-owned parent China Minmetals’ access to state-backed financing, MMG acquired the Kinsevere copper project in Congo for US$1.36 billion in early 2012. It also bought the partially developed Las Bambas copper project in Peru for around US$7 billion in August 2014.

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A spokeswoman for MMG declined to comment on its interest in the Freeport-McMoRan stake.

Freeport was required to alert its partner in the mine, Canada’s Lundin Mining, once a formal bid was on the table, which had not happened yet, Lundin cgief executive Paul Conibear said. Lundin also has the right to match any offer for a stake in the Tenke Fungurume asset, though Conibear said the it was happy with its holding.

Freeport chief executive Richard Adkerson said in January that any operation, in full or in part, could be sold as the US-based company seeks to reduce a debt load that stood at US$20 billion at the end of last year. Adkerson said last month he expected to agree to another US$1.6 billion of divestments by the end of June, bringing the 2016 total to US$3 billion.

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Freeport needs to raise that sum by the end of the quarter to avoid having to provide collateral for its revolver and term loan, according to its first-quarter earnings report. The producer of gold, silver and copper agreed in February to sell a 13 per cent stake in the Morenci mine in Arizona to Sumitomo Metal Mining for US$1 billion. Freeport was also trying to sell 10 per cent to 20 per cent of its North and South American operations, a source said last month.

Tenke Fungurume is one of Freeport’s five so-called core mines, which also include Cerro Verde and Morenci, as well as El Abra in Chile and Grasberg in Indonesia. Lundin owns a 24 per cent of Tenke Fungurume, while Gecamines, Congo’s state-owned copper producer, holds 20 per cent, according to Freeport’s website.