GLENCORE said on Tuesday it was in talks to sell a 40% stake in its copper and cobalt mines in the Democratic Republic of Congo.
A memorandum of understanding had been signed between Glencore and potential buyer Orion Critical Mineral Consortium – a partnership between Orion Resource Partners and the US government. The transaction, which is for the assets of Mutanda Mining (Mumi) and Kamoto Copper Company (KCC), will imply an enterprise value of $9bn.
If consummated, Glencore and Orion CMC will seek to expand and develop Mumi and KCC, in conjunction with the DRC government and Gécamines, Glencore’s existing partner in KCC. The parties would also look to “acquire additional critical mineral projects and assets in the DRC and the African copper belt more broadly”, said Glencore.
US Deputy Secretary of State Christopher Landau backed the deal saying in a statement it reflected the core objectives of the US-DRC Strategic Partnership Agreement. This is an agreement signed in Washington on December 4 in which the DRC offered the US greater access to its critical minerals in exchange for investment and security cooperation.
Gary Nagle, CEO of Glencore said he was pleased the US government and Orion CMC recognised Glencore’s role as “the only major Western producer of copper and cobalt in the DRC, through our high-quality assets, Mumi and KCC”.
“This proposed transaction is exactly what Orion CMC was established to achieve – securing long-life, high-quality production of critical minerals while supporting resilient supply chains for the US and its allies,” said Oskar Lewnowski, CEO of Orion Resource Partners.
The deal with Orion CMC remains subject to due diligence as well as legal and regulatory approval, said Glencore.
The potential stake sale comes as Rio Tinto is in early talks to buy Glencore in what could create the world’s largest mining company with a combined market value of more than $200bn. The two companies are set to request additional time to finalise a deal as they negotiate over valuation terms, said Bloomberg News last week.
Under UK takeover regulations, Rio faces a February 5 deadline to either confirm an offer or withdraw from negotiations for six months, unless Glencore requests an extension. Bloomberg said such a request appears highly probable.
The proposed merger would roughly double Rio’s copper production and add about 1 million tons of future growth capacity at a time when copper prices recently reached a record $14,500 per ton
On January 29, Glencore reported a jump in its second-half copper production and an increase in its copper reserves.
