November 14, 2014 / 4:35 PM / 5 years ago

Glencore, Mick Davis among suitors of Anglo's Chile mines - sources

* Warburg Pincus, Lundin also interested

* A smaller outfit is more likely to buy- source

* Copper has bright outlook as supply growth is constrained

By Silvia Antonioli and Anjuli Davies

LONDON, Nov 14 (Reuters) - Commodity group Glencore and X2, a company set up by former Xstrata boss Mick Davis, are among the suitors of the Chilean copper assets put up for sale by global miner Anglo American, industry and banking sources said this week.

The assets, which together could fetch up to $1 billion according to two banking sources, have also attracted the interest of private equity firm Warburg Pincus and mining companies Lundin and Nevsun Resources, the sources added.

London-listed Anglo American has mandated Morgan Stanley and Goldman Sachs, according to sources, to sell its mines Mantos Blancos, Mantoverde, its 50.1 percent stake in the El Soldado mine and the Chagres smelter, all in Chile. The process however has only just begun and a sale is not expected until next year.

After an assets review last year, Anglo American said it would divest assets that did not meet its return criteria.

The smallest of the five global diversified mining companies is aiming to boost its return on capital employed to at least 15 percent by 2016, from 11 percent last year.

“We have defined the optimal structure for our portfolio of copper assets and are exploring the potential divestment of our smaller copper assets in Chile,” a spokesman for Anglo American said, declining to comment on advisers and potential buyers.

One of the banking sources said although many companies are looking at these assets given the lack of copper assets up for grabs, it was more likely that one of the smaller suitors would eventually buy them.

“These assets have some technical challenges and the mines are near their end of life so they won’t reach the sort of return a big company wants,” he said. “But they might be a good fit for some of the smaller guys.”

Copper is one of the metals with the brightest medium-term outlooks as geological, political and infrastructure issues constrains its supply growth.

Warburg Pincus hired ArcelorMittal’s former mining head, Peter Kukielski in January, with a view to buying some natural resources assets.

Davis has raised almost $5 billion for its new venture X2, hoping to build a new large mining company.

Morgan Stanley, Warburg Pincus, X2, Glencore and Goldman Sachs declined to comment. Lundin and Nevsun were not immediately available to comment. (Editing by Elaine Hardcastle)

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