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Robust interest seen in Las Bambas: Glencore

Sep 11, 2013 | 04:47 PM | Mark Burton

Tags  Las Bambas project, Peru project, Glencore Xstrata, China Minmetals, Chinalco, copper project, Citic Resources, Ivan Glasenberg Telis Mistakidis

LONDON — Glencore Xstrata Plc expects to receive bids for the Las Bambas copper project in Peru starting the week of Sept. 16, chief executive officer Ivan Glasenberg said in a briefing with journalists Sept. 10.

The Peruvian assets were put up for sale earlier this year to satisfy restrictions imposed by China’s Ministry of Commerce on Glencore’s acquisition of Xstrata.

The project has drawn interest from several Chinese companies, with China Minmetals Corp. and Aluminum Corp. of China (Chinalco) said likely bidders, along with Jiangxi Copper Co. Ltd. and Citic Resources Holdings Ltd.

There has been speculation that China’s National Development and Reform Commission (NDRC) might name one bidder to represent the country in the sale process, but Glasenberg played down the suggestion that competition for what was Xstrata’s flagship greenfield copper project would be restricted.

"We understand the NDRC sometimes doesn’t allow companies to compete, but I think the interest we’ve seen in China is very robust. ... What we see is that there will be three to four groups bidding (from China)," he said, adding that there is also interest from outside China. "There is some very strong interest from major groups. They are not in the same consortiums, so it seems they are going to compete."

Xstrata previously estimated Las Bambas’ commissioning and ramp-up at the end of 2014 at a capital cost of $5.2 billion, but Glencore has since pushed that back by one year and increased the capital cost projections by $700 million, copper division head Telis Mistakidis told investors. "The only good thing there is that a quarter of a million tonnes of copper doesn’t appear on the market," he added.

With bids due to arrive next week, the company is targeting a strategic partnership deal by year-end, Mistakidis said.

The original mine plan for Las Bambas envisaged significant synergies with the Antapaccay Mine complex in Peru, which has now ramped up to 190,000 tonnes per year of contained copper, above its nameplate capacity, after capital expenditures of $1.6 billion, Mistakidis said. Las Bambas has a "better ore body than Antapaccay" and the mine plan follows the Antapaccay blueprint closely, which cuts the remaining development risk for the project significantly.

A version of this article was first published in AMM sister publication Metal Bulletin.

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