China's Jiangxi Copper interested in Glencore's Peru mine: sources

HONG KONG Fri Aug 23, 2013 5:36am EDT

A general view of a refined copper mine of Jiangxi Copper Company in Dexing, Jiangxi province, March 26, 2013. REUTERS/Stringer

A general view of a refined copper mine of Jiangxi Copper Company in Dexing, Jiangxi province, March 26, 2013.

Credit: Reuters/Stringer

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HONG KONG (Reuters) - Jiangxi Copper Co Ltd has joined a list of potential Chinese suitors interested in buying Glencore Xstrata Plc's (GLEN.L) $5 billion-plus Las Bambas copper mine in Peru, underscoring the Chinese government's desire to plug a shortage in supply.

Glencore's sale of the mine comes at an opportune time for China which is the world's top importer of copper concentrate but which produces only about a third of the amount it needs, according to recent production data <MTL/CHINA6>.

Jiangxi (600362.SS), China's biggest copper producer, may eventually team up with either Chinalco Mining Corp International (3668.HK) or MMG Ltd (1208.HK), which are also evaluating bids for the mine, one of several sources said. All three might team up together, the source said.

If Jiangxi did agree to join a consortium bid, it would likely play a junior role, the people said, adding that a consortium would also be seeking financial investors to back any offer.

The auction has generated limited interest from other copper miners around the world so far, the people added. All the sources declined to be identified due to the confidential nature of the discussions.

Glencore's Peru mine is scheduled to produce 400,000 tons of copper a year starting in 2015 for at least five years.

Jiangxi Copper already has operations in Peru. It owns 40 percent of the Northern Peru copper mining project, which is expected to start production between 2014 and 2016. State-owned China Minmetals Non-Ferrous Metals owns 60 percent of the mine.

Glencore (0805.HK) has invited first round bids for the Las Bambas mine by mid-September. Glencore agreed to sell the mine in return for Beijing's blessing for its $35 billion purchase of Xstrata.

Under a deal struck with Beijing's Ministry of Commerce in April, Glencore has until end-August 2014 to find a buyer but Chief Executive Ivan Glasenberg said this week he hoped to reach an agreement by the end of this year.

Chinalco Mining Corp is working with Goldman Sachs (GS.N) and Morgan Stanley (MS.N) for its planned bid, while MMG has engaged Citigroup (C.N) and Bank of America Corp (BAC.N), the sources said.

Glencore, MMG and Jiangxi declined to comment.

Citigroup and Bank of America declined to comment, while Goldman Sachs and Morgan Stanley did not offer an immediate response.

(Additional reporting by Sonali Paul; Editing by Miral Fahmy and Edwina Gibbs)

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