Miners Still Stuck in a Debt Swamp – by David Fickling (Bloomberg News – September 28, 2016)


How hard can it be for a miner to sell some assets when commodity prices are on a tear?

Harder than you might think.STATUS OF CONGO DISPOSALLimboFreeport-McMoRan bondholders are said to be standing in the way of a $2 billion sale of its Gulf of Mexico oil and gas fields to Anadarko, Bloomberg News reported late Tuesday. The creditors want to renegotiate terms if their loans remain with Freeport, rather than transferring to the financially stronger Anadarko, according to a letter to the miner.

That’s not even the most complicated sale process Freeport is engaged in right now. A $2.65 billion disposal of its 56 percent stake in the Tenke Fungurume copper mine in the Democratic Republic of Congo is in limbo almost five months after it was announced.

Second-largest shareholder Lundin Mining is still deciding whether to exercise rights to acquire the interest ahead of the agreed buyer, China Molybdenum, or alternatively to stand pat or sell its own holding.

From there, it gets still more complex. The Congolese government-owned miner Gecamines has a 20 percent stake and is threatening to block Freeport’s sale and any potential exit by Lundin for good measure. On top of that, the country is verging on political crisis, with 32 people killed last week and 114 arrested in clashes between police and protesters opposing President Joseph Kabila’s decision to delay elections due in November.

There are similar problems elsewhere on the continent. South Africa’s public-sector pension fund manager, Public Investment Corp., the largest holder of stock in Anglo American, wants a shareholder vote on the mining company’s divestment plans.

For the rest of this column, click here: https://www.bloomberg.com/gadfly/articles/2016-09-28/mining-companies-still-stuck-in-a-debt-swamp