Freeport closes Congo mine sale, CEO talking to State miner
Reuters, 17th November 2016
LIMA – Freeport-McMoRan said on Wednesday it had completed the $2.65-billion sale of its stake in the Democratic Republic of Congo's Tenke mine, as chief executive Richard Adkerson said in an interview that he hopes negotiations will resolve the state miner's opposition to the deal.
Freeport, the world's largest publicly-listed copper producer, announced in May that it would sell its 56% stake in the mine to China Molybdenum and use the cash to cut its bloated debt.
State miner Gecamines owns 20% of Tenke and has repeatedly said it opposes the Freeport transaction, saying that it was not informed beforehand of the plans and had the right to make an offer first for any sale.
Meantime, Freeport's deal has been held up for months by minority mine owner Lundin Mining, which had the right to supplant China Molybdenum's offer, sell its stake, or do nothing.
That barrier was eliminated on Tuesday, when Lundin said it would sell its 24% stake to Chinese private equity firm BHR Partners for about $1.14-billion in cash.
Gecamines is also "strongly opposed" to Lundin's transaction, arguing on Wednesday that it has a preemptive right to buy Lundin's stake in the mine. Lundin declined to comment on the matter.
Freeport will work with Gecamines to resolve the dispute, Adkerson said in an interview on Wednesday, adding that if that process fails, the Phoenix-based miner is confident it would prevail in arbitration.
Freeport has completed asset sales worth $4.03-billion so far this year, RBC Capital Markets analyst Fraser Phillips said in a note to clients, and that could increase to $6.62-billion if energy asset sales close.
Adkerson added that the surprise victory of Donald Trump in the US presidential election last week had triggered "fund buying" of copper, bringing its price closer to fundamentals in a market that he said was now "essentially balanced."
Last week, benchmark copper prices recorded their biggest weekly gain since 2011, fuelled largely by Trump's promises of infrastructure spending. The metal is used in everything from wiring to construction.
The rally has been a "pleasant surprise", he added, but would not alter Freeport's strategy. Any additional revenue from higher prices would go toward debt repayment, he said.
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