U.S. Mining Company Sells African Copper Mine To China For $2.7B

Avatar
Written by Staff

From FinancialTimes. Story by James Wilson.

U.S. mining company Freeport-McMoRan, the world’s largest listed copper miner, on Monday outlined plans to sell its largest African copper mine to China Molybdenum for $2.65 billion, its most decisive step so far to reduce its $20 billion debt.

The sale of the Tenke Fungurume mine in the Democratic Republic of Congo will be seen as one of the mining industry’s biggest forced sales after a steep commodity downturn that has pushed several companies to take drastic action to shore up their balance sheets.

It is the second large acquisition within two weeks by China Molybdenum (CMOC), a Chinese natural resources group that said this month it wanted to expand its global presence.

CMOC last month agreed to buy Brazilian assets from Anglo American, another miner with a large debt load, for $1.5 billion.

Freeport made an expensive and contentious expansion into oil and gas in 2012, but last year’s plunge in commodity prices put pressure on the company to reduce its debts.

CEO Richard Adkerson is willing to consider offloading big assets, and Freeport in February sold a 13 percent stake in its Morenci copper mine in the U.S. to Sumitomo Metals of Japan for $1 billion.

“Since the start of 2016, we have announced over $4 billionn in asset sale transactions,” Adkerson said on Monday. “We are committed to our immediate objective of reducing debt while retaining a large portfolio of high quality assets and resources and a leading position in the global copper industry.” Freeport recorded net debt of $20 billion on March 31.

The Tenke mine produced 204,000 tonnes of copper last year, generating revenue of $1.4 billion and earnings before interest.

“Tenke is well positioned to generate strong cash flow throughout the commodity cycle and, by virtue of its substantial mineral endowment, to continue producing high-grade copper for decades to come,” said Steele Li, executive chairman of CMOC.

Freeport controls 56 percent of Tenke, one of the five big mines in its portfolio.

A further 24 per cent of Tenke is owned by Canada’s Lundin Mining, which has three months to exercise a right of first refusal to buy the stake Freeport is proposing to sell to CMOC.

The remaining 20 percent is owned by Congo’s state mining group.

Read more at FinancialTimes.