As Glencore Plc looks to reduce its debt load by selling assets, analysts say Chinese companies would be most interested in the Swiss trader’s copper mines.
With China’s economic slowdown roiling commodity markets, Glencore has announced measures to shore up its balance sheet, including issuing new shares, scrapping dividends and selling assets. While it hasn’t flagged its copper operations alongside options including the sale of stakes in agriculture assets and precious metals streaming deals, the China Mining Association, Argonaut Securities Asia Ltd. and Clarksons Platou Securities say the Chinese would be willing buyers.
China’s commodities companies are seizing on the turmoil in markets to fund or buy suppliers or assets. Iron-ore giant Vale SA signed four deals with Chinese counterparts in May including a credit agreement worth as much as $4 billion, while MMG Ltd., the overseas unit of China’s biggest state-owned metals trader, led a group that bought the Las Bambas copper project in Peru from Glencore last year for about $6 billion.
“If Glencore wanted to have some asset sales then they could definitely speak to some of these Chinese companies,” Helen Lau, a mining analyst at Argonaut Securities, said by phone from Hong Kong. Potential buyers are seeking assets with high grade, good logistics and low political risks, Lau said. “Of course the price is very, very important.”
Glencore advanced as much as 11 percent in London trading Wednesday, gaining for a second day, after a rout that drove yields on some of its bonds to junk levels and knocked 30 percent off its share price on Monday. The company declined to comment on how it would respond to any approaches over its copper assets. Glencore is “getting on and delivering a suite of measures to reduce our debt levels,” it said Tuesday in an e-mailed statement.
Glencore has copper operations in countries including Chile, Zambia and Peru and is the third-largest producer of mined copper, according to its website. The company has about 150 mines, energy assets and agricultural facilities globally.
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