Glencore to sell copper mines in Chile, Australia to curb debt

The logo of Glencore is seen in front of the company's headquarters in the Swiss town of Baar.
The logo of Glencore is seen in front of the company's headquarters in the Swiss town of Baar.PHOTO: REUTERS

LONDON (BLOOMBERG) - Glencore is in talks to sell two mid- sized copper mines in Australia and Chile after approaches from buyers, adding to a US$10 billion (S$13.98 billion) debt-cutting plan announced last month.

The trading-cum-mining group may divest the Cobar mine in Australia's New South Wales together with a metallurgical plant that produces about 50,000 metric tons of copper-in-concentrate a year, Glencore said on Monday (Oct 12) in a statement. It's also offering the Lomas Bayas open-pit operation in Chile's Atacama desert, which produces about 75,000 tons of refined copper a year.

"The sale process is in response to Glencore receiving a number of unsolicited expressions of interest for these mines," the Switzerland-based company said. "This will allow potential buyers to bid to purchase either one or both of the mines and may or may not result in a sale."

The disposals would add to a debt-cutting programme announced by chief executive officer Ivan Glasenberg in early September. That plan includes selling US$2.5 billion of new stock, asset sales, spending cuts and suspending the dividend - in total reducing debt from US$30 billion nearer to US$20 billion. The company has said it intends to raise at least US$2 billion from the sale of a minority stake in its agricultural assets and precious-metals streaming transactions.

The uncertainty that's roiled metal markets has seen Glencore's shares in London swing wildly in the past few weeks. Its stock plunged 29 per cent on Sept 28 to a record low on concern weak prices threatened its ability to repay debt. In the two weeks since, the shares have almost doubled. Glencore halted trading in Hong Kong on Monday pending the announcement.

The potential copper-mine sales come as the price of the red metal hovers near its lowest since the global financial crisis. Copper for delivery in three months on the London Metal Exchange is trading just above US$5,000 a ton, about half the US$10,190 record set in 2011.

"Copper isn't performing well, yet in fact that's actually adding to its appeal as it's probably now at the bottom of its price cycle," Gavin Wendt, senior resource analyst at Mine Life Pty in Sydney, said by phone. "It's understandable that people are out there and looking to acquire copper assets at this moment."