Freeport to sell Congolese copper mine to China Molybdenum for US$2.65 billion
Deal is Chinese company’s second acquisition in as many weeks
US miner Freeport-McMoRan has agreed to sell its majority stake in the Tenke Fungurume copper project in the Democratic Republic of Congo to China Molybdenum for US$2.65 billion in cash, handing the Chinese company one of the world’s most prized copper assets.
The deal marks China Molybdenum’s second back-to-back acquisition in as many weeks and is a big vote of confidence in copper, which many see as a bright spot among base metals. It is also the biggest copper deal since Glencore sold its Las Bambas copper mine in Peru for US$6 billion in 2014.
China Molybdenum’s decision comes just days after Rio Tinto gave the green light for a US$5.3 billion expansion of the Oyu Tolgoi copper mine in Mongolia.
Even though copper is languishing near its lowest price in seven years due to a supply glut, the recent corporate activity is a sign that some investors are willing to the call the bottom on the commodities cycle.
Tenke is well positioned to generate strong cash flow throughout the commodity cycle
Freeport, like other big miners, has been selling assets to cut debt, while China has been snapping up commodity assets around the world to feed its massive economy. The deal takes China’s announced outbound merger and acquisition tally to about US$100 billion so far this year, just shy of the record US$104 billion for all of last year.
Freeport, the world’s biggest listed copper producer, has debt of nearly US$21 billion. It is also has one of the world’s largest copper-cobalt deposits. Since start of this year, it has sold about US$4 billion worth of assets.