MANILA, Philippines – Global commodities giant Glencore International has hurdled the main obstacle in completing its takeover of Xstrata Plc, the world’s 4th largest copper producer, after the regulating body of China approved the US$67 billion deal.
The deal will make Glencore the world’s 4th largest diversified miner.
Both Glencore and Xstrata have operations in the Philippines.
The multi-billion takeover takes effect on May 2 year and will include the sale of Xstrata’s copper mine in Peru.
The announcement ended 14 months of negotiations that began as a merger but ended in a takeover of Glencore of Xstrata.
Xstrata owns the controlling shares of Sagittarius Mines Inc (SMI), which in turn owns the $5.9 billion Tampakan copper-gold project.
Glencore owns the Philippine Associated Smelting and Refining Corp. (PASAR).
Xstrata owns 62.75% of Sagittarius Mines which is facing difficulties obtaining the nod of the local government of South Cotabato.
In 2010, the local government of South Cotabato passed an ordinance banning open pit mining in the South Cotabato.
Last February, SMI finally secured an environmental compliance certificate from the Philippine environmental bureau but will still have to get the okay of the provincial government unit.
The Glencore takeover of Xstrata is expected to further push back the commercial production target of SMI.
In 2012, SMI announced it is eyeing a 2019 target to commence commercial production after it admitted it cannot meet its earlier projected 2016 full commercial operation.
Xstrata also owns 19.99% of Indophil Resources NL, which controls the remaining 37.5% of SMI.
The takeover has already claimed the scalp of Xstrata chief executive officer Mick Davis who will immediately step down on May 2 instead of steering the company for another 6 months after the takeover.
Although local executives of SMI have been mum over their fate in the takeover, many key company officers are expected to be lose their position.
SMI could also end up in the selling block as part of the conditions laid down by China and Tampakan Mines if Glencore fails to dispose of some of its assets as part of the clipping down of its influence in copper trade business.
In approving the takeover, the Chinese Ministry of Commerce required Glencore to sell its US$5.2 billion Las Bambas project in Peru.
Failure of Glencore to sell the Peruvian project in the third quarter of 2014 and the sale completed by the first half of 2015, it then will have to execute the “rapid sale” of one of its four major projects that includes the Tampakan Copper and Gold Project held by SMI. – Rappler.com
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