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Glencore has held preliminary discussions about promoting its multibillion-dollar copper and cobalt mines within the Democratic Republic of Congo, in what could be a big shift in technique by the largest western investor within the African nation.
The FTSE 100 group final month rejected an unsolicited bid for the mines from a possible purchaser within the Center East as a result of the supply was too low, in keeping with individuals conversant in the matter.
The corporate would think about promoting half or all of its Congolese property for the precise value, in keeping with a number of individuals conversant in the matter.
Among the individuals added that the corporate had not began a proper sale course of and it was potential that no deal could be accomplished.
Glencore owns the Mutanda copper-cobalt mine and a 75 per cent stake within the Kamoto Copper Firm, wherein Congolese state-owned miner Gécamines additionally has a holding. Analysts at RBC worth the mines at $6.8bn.
The mines have been a key a part of Glencore’s pitch to western carmakers to be their provider of selection for a collection of electrical car metals.
The worldwide rush for copper, a crimson steel utilized in wiring, cables and electrical autos, has triggered a wave of mergers and acquisitions exercise among the many main miners.
Nevertheless, the Congolese mines have been far much less worthwhile than Glencore’s different copper property — producing simply $195mn of earnings in 2023 on revenues of $2.4bn — due to working setbacks and low cobalt costs.
Final February Glencore took a $1bn pre-tax impairment on the Congolese copper mines due to poor cobalt market situations and the settlement of a tax dispute.
Glencore mentioned in an announcement: “On the finish of final yr, Glencore obtained an unsolicited method relating to its operations within the DR Congo. The method was rejected. Glencore has not engaged any banks or advisers and isn’t operating a sale course of for its operations within the DR Congo.”
In current weeks, Glencore has individually held casual discussions with potential patrons over the way forward for its property in Kazakhstan, in keeping with individuals conversant in the talks.
Glencore deserted a sale course of final yr for Kazzinc, a big zinc, lead and gold producer wherein it holds a 70 per cent stake. RBC estimates the worth of the stake at $5.1bn.
The gross sales would probably be the largest disposals by Glencore since chief government Gary Nagle took the helm in 2021.
Glencore declined to touch upon the potential disposal of property in Kazakhstan.
Its departure from DR Congo could be a big setback to the nation’s makes an attempt to courtroom western funding to cut back reliance on China. Glencore is the one main non-Chinese language overseas investor within the nation’s mines moreover Kazakhstan-based Eurasian Assets Group.
Glencore’s Congolese mines produced 225,000 tonnes of copper and 35,000 tonnes of cobalt final yr, making the group the world’s second-biggest cobalt producer.
Any potential sale could be additional difficult by the truth that Glencore pays royalties on the mines’ output to Israeli businessman Dan Gertler, who’s below US sanctions.
Glencore is likely one of the world’s largest commodity merchants and in addition has a big mining portfolio. It’s the world’s sixth-largest producer of copper, and high western producer of thermal coal.
Final yr Glencore held temporary merger talks with Anglo-Australian group Rio Tinto, and the earlier yr it made a $23bn hostile bid to amass Teck Assets of Canada, which was rebuffed.
The corporate is because of report its annual outcomes on Wednesday.
