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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 can be a major 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 accordance with individuals acquainted with the matter.
The corporate would take into account promoting half or all of its Congolese property for the appropriate value, in accordance with a number of individuals acquainted with the matter.
A number of the individuals added that the corporate had not began a proper sale course of and it was potential that no deal can be accomplished.
Glencore owns the Mutanda copper-cobalt mine and a 75 per cent stake within the Kamoto Copper Firm, by which 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 alternative for a collection of electrical automobile metals.
The worldwide rush for copper, a pink steel utilized in wiring, cables and electrical autos, has triggered a wave of mergers and acquisitions exercise among the many main miners.
Nonetheless, 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 a press release: “On the finish of final yr, Glencore obtained an unsolicited method concerning its operations within the DR Congo. The method was rejected. Glencore has not engaged any banks or advisers and isn’t working a sale course of for its operations within the DR Congo.”
In current weeks, Glencore has individually held casual discussions with potential consumers over the way forward for its property in Kazakhstan, in accordance with individuals acquainted with the talks.
Glencore deserted a sale course of final yr for Kazzinc, a big zinc, lead and gold producer by which it holds a 70 per cent stake. RBC estimates the worth of the stake at $5.1bn.
The gross sales would doubtlessly be the largest disposals by Glencore since chief govt Gary Nagle took the helm in 2021.
Glencore declined to touch upon the potential disposal of property in Kazakhstan.
Its departure from DR Congo can be a major setback to the nation’s makes an attempt to court docket western funding to cut back reliance on China. Glencore is the one main non-Chinese language international investor within the nation’s mines apart from Kazakhstan-based Eurasian Sources 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 can be additional sophisticated 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 greatest commodity merchants and likewise 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 transient merger talks with Anglo-Australian group Rio Tinto, and the earlier yr it made a $23bn hostile bid to accumulate Teck Sources of Canada, which was rebuffed.
The corporate is because of report its annual outcomes on Wednesday.
