A hunger mollified

10 May 2016 By Una Galani Follow @ugalani

The People’s Republic is warming up to the sector as global miners race to cut debt. The latest deal sees China Molybdenum snap up Freeport’s Congo copper project for $2.7 bln. At the current pace, China’s hunger for overseas mining assets could return close to peak levels.

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Freeport-McMoRan agreed on May 9 to sell its 56 percent interest in the Tenke copper project in the Democratic Republic of Congo to China Molybdenum for $2.65 billion in cash.

The New York-listed company will receive another $60 million from China Moly if the average copper price exceeds $3.50 per pound and another $60 million if the average cobalt price exceeds $20 per pound between 2018 and 2019.

China Moly also gets an exclusive option to acquire Freeport’s interests in the Kokkola cobalt refinery in Finland for $100 million, and another exploration project in the DRC for $50 million.

The buyer will pay Freeport a termination fee of $132.5 million if it fails to obtain all the required approvals from Chinese authorities.

The deal is China Moly’s largest outbound acquisition. Last month, it agreed to pay $1.5 billion to buy Anglo American’s niobium and phosphates business in Brazil.

Dual-listed China Moly has a market capitalization of $7.4 billion. Its A-shares, traded on the mainland, had fallen 24 percent this year before they were suspended on April 27. The Hong Kong shares had fallen 1.4 percent in the year to date before they were suspended on May 9.

Shares in Freeport closed down 10.8 percent at $10.50 after the deal was announced.

Context News

Freeport-McMoRan agreed on May 9 to sell its 56 percent interest in the Tenke copper project in the Democratic Republic of Congo to China Molybdenum for $2.65 billion in cash.

China Moly also gets an exclusive option to acquire Freeport’s interests in the Kokkola cobalt refinery in Finland for $100 million, and another exploration project in the DRC for $50 million.

The buyer will pay Freeport a termination fee of $132.5 million if it fails to obtain all the required approvals from Chinese authorities.

The deal is China Moly’s largest outbound acquisition. Last month, it agreed to pay $1.5 billion to buy Anglo American’s niobium and phosphates business in Brazil.

Shares in Freeport closed down 10.8 percent at $10.50 after the deal was announced.

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