Ministry of Commerce has agreed to approve the merger between
Swiss mining companies Glencore International Plc and Xstrata
Plc as long as certain conditions are met, according to the
The conditions include
divestment of Glencores stake in the Las Bambas copper
project in Peru, according to the document posted on the
Glencore must sell all of its
post-merger ownership interest in Las Bambas, which is being
developed by Xstrata in Peru, to a ministry-approved purchaser
before Sept. 30, 2014. It must be sold for not less than the
predetermined price, unless otherwise agreed to by Glencore,
and the sale must be completed by June 30, 2015.
The predetermined price will be
either the fair market price of Glencores ownership
interest in Las Bambas or the total of all costs actually
incurred by both Glencore and Xstrata in Las Bambas, whichever
Glencore will begin the process
of selling Las Bambas and announce its offer to sell within
three months of the Ministry of Commerces
After that, it must keep the
ministry informed about its search for possible buyers for its
stake in Las Bambas.
Glencore has agreed to use
"reasonable best efforts" to give the ministry the details of
possible buyers for Las Bambas by Aug. 31, 2014.
If Glencore does not enter a
binding agreement by Sept. 30, 2014, or does not conclude the
transfer of its ownership interest by June 30, 2015, it must
bring in a divestiture trustee to sell its interest via auction
in any of its projects in Tampakan, Philippines; Frieda River,
Papua New Guinea; or El Pachón and Alumbrera in
There will be no minimum price,
and the sale of one of these must be concluded within three
months from Oct. 1, 2014, or July 1, 2015.
Furthermore, for a period of
eight years beginning Jan. 1, 2013, Glencore must offer to
supply Chinese customers with a minimum volume of copper
concentrate per year under long-term contracts.
The minimum volume must be
900,000 dry metric tonnes, which is the same as the average
volume sent to Chinese customers under long-term contracts by
both Glencore and Xstrata in 2011 and 2012.
During the same time frame,
Glencore will offer to supply Chinese customers with zinc
concentrate and lead concentrate via long-term and spot
Glencore must also take on an
independent monitoring trustee or trustees to monitor its
performance in these obligations and commitments.
Within 15 days of the end of
each quarter from now on, Glencore must report to the Ministry
of Commerce and the monitoring trustee to show that it is
compliant with its commitment on Las Bambas.
In other news, Xstrata chief
executive officer Mick Davis has also agreed not to take up his
six-month post as chief executive officer and executive
director of Glencore-Xstrata after completion of the
A version of this article was first published by AMM sister
publication Metal Bulletin.