Glencore Considers Selling Two Copper Mines - 2nd Update
12 Outubro 2015 - 7:28AM
Dow Jones News
By Rhiannon Hoyle And Alex MacDonald
Glencore PLC said it is considering selling two of its copper
mines, as the commodities group races to shore up its balance sheet
and restore investor confidence.
The Switzerland-based company in September said it intended to
sell some assets to help raise cash as it pledged to cut net debt
by a third, to about $20 billion, by the end of next year. Concerns
about the company's debt have sent its stock on a wild ride in
recent weeks, sending it down 29% in one day on Sept. 28 before a
recovery.
Glencore--the world's largest copper supplier and third-largest
copper miner--said Monday it had launched a process to sell its
Cobar underground mine in Australia's New South Wales state and its
Lomas Bayas open-pit operation in northern Chile. The company
started the process in response to a number of unsolicited
expressions of interest from various potential buyers. Interested
parties will be able to place an offer for one or both of the
mines, the company said.
Glencore didn't disclose a value for the assets. Analysts said
the mines could fetch between $600 million to $1 billion.
"The assets are small in the context of Glencore's portfolio,
but likely to be relatively valuable to other entities, in our
view," said Citigroup, the company's corporate broker, in a note.
"We believe selling the smaller assets would be a positive outcome
as it would allow Glencore to focus on larger and more profitable
assets while still generating the sale proceeds to de-gear the
balance sheet." Citi valued the two assets at $1 billion.
Glencore's shares rose more than 2% in early morning trading
before falling 1% on the day at 127.75 pence a share.
The copper sales are a fresh sign of how Glencore and other
miners are grappling with a multiyear slump in prices for nearly
every commodity they produce and sell--from coal to copper to
zinc.
Copper hit a more than six-year low in August over fears of
excess supply given an economic slowdown in China, the world's
second-largest economy and world's largest consumer of many
commodities. The price has since rebounded 8.4% to be at $5,334.50
a ton on expectations that other miners might follow Glencore's
lead in cutting copper output.
A person close to the company said Glencore would only sell if
the price is right and said this would be in addition to the $2
billion in assets sales proposed last month. Glencore has appointed
Bank of America Merrill Lynch and UBS Group AG to advise on the
process, said another person familiar with the matter.
The Cobar mine has a relatively high copper grade but is slated
to close in five years' time. It was valued at $329 million by
Glencore at the end of 2013 and is set to produce about 45,000 tons
of copper in concentrate this year, according to Citi.
Meanwhile the Lomas Bayas mine, located in northern Chile's
Atacama desert--the world's driest--is a low-grade copper mine with
enough red metal to keep operating until 2028. Citi forecasts the
mine will produce about 70,000 tons of copper cathode this
year.
Liberum Capital mining analyst Ben Davis questioned whether it
made sense for Glencore to sell copper assets when the price of
copper is hovering near multiyear lows. "If they get a good price
maybe it's good; who knows," he said.
Glencore last month said it would shut two of its loss-making
African copper mines until the first half of 2017 to complete
cost-cutting programs. The miner said this would result in a loss
in copper output of about 400,000 tons, equivalent to more than 1%
of global supply during the period.
Aside from selling the two copper mines, Glencore has also been
considering selling a stake in its agricultural business, a unit it
expanded in recent years with the 2012 acquisition of Canada-based
Viterra, as well as new streaming deals--a method of fundraising
that tends to be a quicker way of raising cash than asset
sales.
In a meeting with fund managers in New York last week, Glencore
executives, including Chief Executive Ivan Glasenberg, said the
company expects to raise between $1 billion and $1.5 billion from
streaming deals, which give miners an upfront payment in exchange
for the future delivery of metals such as gold, according to people
familiar with the presentation.
Investors have raised concerns about the health of Glencore's
debt-fueled trading business amid a marked downturn in world
resources markets. That has triggered share price volatility in
recent weeks.
The company has already issued $2.5 billion in new shares, and
expects to save billions more by scrapping dividends and cutting
costs.
Scott Patterson contributed to this article
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 12, 2015 06:13 ET (10:13 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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