JOHANNESBURG (miningweekly.com) – Xstrata CEO Mick Davis has agreed to not take up the six-month role of CEO and executive director of the combined Glencore Xstrata group – one of the conditions set by China’s Ministry of Commerce (Mofcom) for it to approve the $33-billion deal.
Swiss commodities trader Glencore announced on Tuesday afternoon that Mofcom had given its conditional approval for the merger. CEO Ivan Glasenberg will assume the role of CEO of the combined group from the effective date, which was anticipated to be May 2.
Davis would serve as consultant to Glencore Xstrata until June 30 to support the integration process. Glencore had awaited approval of the deal from Chinese authories for several months.
This followed Glencore and Xstrata shareholders’ approval of the merger and the creation of the $90-billion natural resources group Glencore Xstrata.
Following receipt of approval in China and Glencore having given effect to the commitments required by the European Commission, the completion of the merger was now only conditional upon completion of the Xstrata court process.
Meanwhile, other conditions precedent set by Mofcom included that Glencore would have to sell all of its post-merger ownership interest in the Las Bambas copper project, in Peru –currently being developed by Xstrata – to a buyer approved by Mofcom. The transaction would have to occur before September 30, 2014, for not less than the predetermined price.
The transfer of the project would have to be completed before June 30, 2015.
If Glencore failed to meet these dates, it would have to appoint a divestiture trustee to sell, by way of auction, its ownership in one of four properties – Tampakan, in the Phillipines; Frieda River, in Papua New Guinea; El Pachón, in Argentina; or Alumbrera, in Argentina – at no minimum price within three months.
Glencore would also, for a period of eight years, starting January 1, 2013, have to continue to supply its Chinese customers with a minimum volume of 900 000 dry metric tonnes of copper concentrate each year, under long-term contracts.
The price for a minimum of 200 000 dry metric tonnes of copper concentrate would have to be offered by Glencore in accordance with the applicable yearly benchmark price agreed between major miners and major smelters, and the price for the remaining 700 000 dry metric tonnes of copper concentrate would have to be offered with reference to the applicable yearly benchmark price.