Chinalco arm, MMG said to pursue Glencore’s US$5b Peru copper mines

Two companies linked to Chinese state-backed groups are weighing rival bids for Glencore Xstrata’s roughly US$5 billion worth of copper mines in Peru, people familiar with the matter said.

A successful bid by either Chinalco Mining or Hong Kong-listed MMG group would mean the Peruvian assets end up in the hands of a buyer linked to China – the country that forced the sale in the first place.

Glencore said it would sell the Las Bambas project in Peru’s Cotabambas and Grau Provinces as part of an agreement with China’s anti-monopoly ministry relating to its US$35 billion takeover of Xstrata earlier this year. It also agreed to allow the ministry to approve the buyer.

People familiar with the matter say Chinalco Mining, a unit of China’s state-run aluminium group, and MMG are lining up bids for the project, which is slated to produce a minimum of 400,000 tonnes a year.

The sale process is also expected to attract interest from Indian bidders, though many in the market view Chinese entities as the natural owners of the asset.

“The impression in the market is that China would love for this to end up in Chinese hands,” said one person familiar with the process. “That would likely be an overhang on any process. No one wants to go in and spend the time and money to be a stalking horse for a Chinese bidder,” the person said.