The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar. File picture: Michael Buholzer, Reuters The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar. File picture: Michael Buholzer, Reuters
New York - Former Barrick Gold CEO Aaron Regent is among the remaining bidders for Glencore’s Lomas Bayas copper mine in the Chilean desert of Atacama, according to people familiar with the sale.
Regent, who runs Magris Resources, is competing against a small number of Chile-focused operators that have offered Glencore close to $1 billion for the mine, said two people who asked not to be identified as the sale is confidential. While the offering is at an advanced stage, Glencore may still decide to retain the asset, the people said.
A sale at such a price would be a boon for cash-strapped Glencore, which is seeking to trim its $30 billion debt load to $18 billion by the end of this year to appease investors concerned about waning commodity prices.
The Swiss firm said in October it was in talks to sell Lomas Bayas and the Cobar copper mine in Australia after approaches from potential buyers. Together, the operations produce about 125 000 metric tons of copper a year, and Citigroup and UBS Group said at the time they may fetch as much as a combined $1 billion while Investec Plc valued them both as $400 million.
“We’re sure Glencore would jump at such an offer,” Investec analysts wrote in a note to clients on Thursday, pointing to the takeover of copper miner Equinox Minerals struck by Regent in 2011. “Given that Aaron headed Barrick when it made the disastrous $7.7 billion cash bid for Equinox back in 2011, he might be the perfect man to offer $1 billion for Lomas Bayas. In fairness to Mr. Regent, it was a different world back then, with copper above $10 000 ton.”
Barrick’s decision to buy Equinox in 2011 caused its debt to balloon. The company took a $3 billion writedown on the company’s flagship Lumwana project in the fourth quarter of 2012. In 2014 Barrick valued it on its balance sheet at about $1 billion.
Both transactions are now in the second round, one person said. In December, Glencore said it sought to complete the sales during the first half and it had received "extensive interest" from Australian, Asian and South American strategic and financial investors.
The company declined to comment on bidders for the asset when contacted by Bloomberg. Regent was travelling and couldn’t be reached for comment.
Zaldivar sale
In July, Barrick Gold agreed to sell its 50 percent stake in the Zaldivar copper mine in Chile to Santiago-based Antofagasta for $1 billion. Some of the bidders in that sale may also be interested in Lomas Bayas, one of the people said. Lomas Bayas is an open-pit mine located about 120 kilometres (75 miles) northeast of the port of Antofagasta in Chile. It produces about 75 000 tons of copper cathode a year, according to Glencore.
Before his three years heading Barrick to 2012, Regent was CEO of Falconbridge, the owner of Lomas Bayas. Falconbridge was acquired in 2006 by Xstrata, the mining company that was subsequently bought by Glencore in a $29 billion all-share deal in 2013.
Glencore is seeking to sell as much as $4 billion of assets to combat a rout in commodity prices that’s sparked concern from investors about its $30 billion debt load. It last month widened an existing debt-reduction plan, targeting a cut in its borrowing to $18 billion by the end of this year.
Copper sank to a six-year low on Tuesday of $4 329.50 a ton on the London Metal Exchange Thursday. That’s less than half the record of $10 190 set in 2011. Glencore fell 2.4 percent to 70.16 pence by 8:53 a.m. in London. The stock is down 71 percent over the past year, giving the company a market value of about $14.6 billion.
Peter Grauer, chairman of Bloomberg, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.
-With assistance from Danielle Bochove.
BLOOMBERG
