Glencore share price: Miner nearing deal for Las Bambas copper project

on Mar 17, 2014
Updated: Oct 21, 2019
Listen Monday, March 17: Glencore Xstrata (LON:GLEN) is close to agreeing a multibillion-dollar sale of its Las Bambas Peruvian copper project to a Chinese consortium and could confirm the deal as early as tomorrow, according to the Wall Street Journal. Shares in the mining giant have risen today and at 14.31 UTC were 11.30p or 3.80 percent higher at 308.38p.

Executives from Glencore and China Minmetals Corporation, the state-owned Chinese copper company heading the consortium, are meeting tomorrow in London with an aim of signing an agreement. If a deal is concluded, an announcement could be made shortly after the meeting.
Glencore has to sell the Las Bambas project to satisfy conditions set by Chinese competition regulators as part of the approval for the Xstrata merger. The mining giant is bullish on the outlook for copper and is expected to demand a high price for the project. “We have got a lot more comfortable with the asset . . . the reserves are larger than we envisaged and we now know that we can handle a higher production toward the front end than we thought we could before,” chief executive Ivan Glasenberg said earlier this month. “Now it’s just a price discussion. They [Minmetals] have seen the asset.”

“We continue to think the company could receive a good price for this asset,” Paul Gait, a mining analyst at Sanford C. Bernstein, wrote in a report. “We see short-term upside to the stock from the potential for Glencore to report a successful sale of this asset. We were, however, slightly disappointed this was not announced today [March 4].”

The Las Bambas mine was about 45 percent complete by the middle of last year and is due to be fully operational by the second half of 2015. Glencore estimates output of more than 450,000 metric tons of copper a year in the first five years and 300,000 from then on. About $2.7 billion (₤1.62 billion) will be invested this year and next to complete the project.

An acquisition of Las Bambas by a Chinese state-controlled bank would give the world’s second biggest economy greater control over the copper markets. China is using about 40 percent of the world’s supply of the metal for a number of its industries including auto manufacturing and residential and industrial cabling.

**Analysts on Glencore**
Sanford C. Bernstein reaffirmed its ‘outperform’ rating on Glencore’s shares in a note to investors sent last Friday. It gave the stock a price target of 450.00p.
Five investment analysts rate Glencore as a ‘sell’, five give it a ‘hold’ rating and 15 are calling it a ‘buy’. The shares have a consensus rating of ‘hold’ and an average price target of 368.78p.
**As of 15.26 UTC buy Glencore shares at 305.60p.**

**As of 15.26 UTC sell Glencore shares at 305.58p.**