MELBOURNE Aug 1 Miner Glencore Plc has
collected $7 billion from China's MMG Ltd and its
partners with the completion of the sale of one of the world's
largest copper projects, the Las Bambas copper mine in Peru, MMG
said on Friday.
The announcement was the first time the final sum for the
sale of Las Bambas has been revealed, with the Swiss-based giant
expected to use at least half the cash for a capital return to
MMG and its partners Guoxin International Investment Corp
Ltd and state-owned CITIC Metal Co Ltd agreed in April to pay
$5.85 billion, plus the money spent by Glencore since the
beginning of 2014 on building the mine.
Glencore had to sell the Las Bambas project or other assets
by September 2014 in order to win China's approval for its
takeover of miner Xstrata last year, as Beijing feared the
merged group would hold too much sway over global copper supply.
The Swiss-based giant has said it would be able to reward
shareholders with a capital return after the deal is done. Most
had expected completion in September.
With the $7 billion sale having closed on July 31, Glencore
is in a strong position to announce a capital return to
shareholders with its half-year results due on Aug. 20, rather
than having to wait until its annual results in February.
"It's a lot of cash they don't particularly need on their
balance sheet," said Tim Schroeders, a portfolio manager at
Pengana Capital. "I wouldn't be surprised if they announced a
special dividend or capital return at the half-year results."
He estimated the company would return $3 billion to $5
billion over 12 to 18 months, rather than in a single hit.
MMG CEO Andrew Michelmore was in Peru on Friday meeting the
Las Bambas team and has said the company would run a detailed
study before updating investors on plans for completing the mine
and any revised cost estimates.
The mine, due to start producing in 2015, is expected to
produce 2 million tonnes of copper in concentrate in its first
five years of operation.
(Reporting by Sonali Paul; Editing by Richard Pullin)