Glencore acquires Pan American’s Argentine copper mine share for $475 million

Glencore acquires Pan American's Argentine copper mine share for $475 million

Glencore Acquires Majority Stake in Argentine Copper Project

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Swiss commodities giant Glencore has made a bold move to secure a majority stake in an Argentine copper project. The company has agreed to purchase Canadian miner Pan American Silver Corp’s 56% stake in Minera Agua Rica Alumbrera (MARA) for $475 million. This acquisition comes as Glencore aims to expand its holdings of red metal, which is forecasted to play a crucial role in the global transition to a greener economy.

Glencore’s CEO, Gary Nagle, has displayed a bullish belief in the future of copper, as this deal marks the company’s second major copper acquisition this year. In April, Glencore made an unsolicited offer of $22.5 billion for copper and coal assets from Teck Resources. Although this offer was rejected by Teck, Glencore has since approached the company to purchase its coal business for $8 billion. With these strategic moves, Glencore is positioning itself as a significant player in the copper market.

Last year, Glencore’s copper output reached 1,058.1 thousand tonnes, trailing behind industry leader BHP, which produced 1,574 kt. However, Glencore’s recent acquisitions demonstrate its commitment to expanding its copper operations and competing at a higher level.

Pan American’s decision to sell its stake in MARA is part of its strategy to divest non-core assets. The company plans to utilize the proceeds from this sale to reduce debt and improve cash flow. This move aligns with Pan American’s objective of optimizing its portfolio following the acquisition of Yamana Gold Inc.

The MARA joint venture, located in Argentina’s Catamarca province, was initially established in December 2020 with the participation of Glencore, Newmont, Yamana Gold, and Pan American. The project boasts proven and probable mineral reserves of 5.4 million tonnes of copper and 7.4 million ounces of gold, making it an attractive prospect for Glencore’s expansion plans.

The acquisition of MARA reinforces Glencore’s strategy of seeking assets with longer mine life and high-quality ore grades. The company recognizes the growing demand for copper, which has prompted larger mining companies to secure these valuable resources. In July, Glencore also acquired the remaining 18% stake in PolyMet Mining, further strengthening its position in the industry.

Smaller mining companies have struggled due to the recent decline in copper prices, prompting them to raise funds through asset sales. Consequently, industry experts anticipate an increase in consolidation as companies look for stability and financial strength in an uncertain market.

Pan American expects the Glencore deal to be finalized in the third quarter of 2023. This transaction will provide Pan American with the resources to pay down debt and enhance its financial position. In addition to the MARA sale, Pan American has also sold its other copper assets in Peru and Chile, raising $118 million.

As the global transition towards sustainability continues, the demand for copper is expected to soar. Glencore’s strategic acquisitions and investments in the red metal highlight the company’s commitment to capitalizing on this growing market. Through the acquisition of Pan American’s stake in MARA, Glencore solidifies its position as a major player in the copper industry, further fueling its prospects for long-term success.

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