China Molybdenum beats strategics, PE to Rio Tinto copper mine stake
China Molybdenum (CMOC) has fought off competition from PE and strategic investors to acquire an 80% stake in Rio Tinto's Northparkes copper mine in Australia for $820 million.
According to Reuters, The Carlyle Group, KKR, MMG, OZ Minerals and Swiss mining company Nyrstar were all in the running for the asset.
The deal marks the Chinese firm's first offshore foray into copper. It also represents the biggest Chinese outbound mining deal since China Guangdong Nuclear Power Corp. won control of the Husab uranium project in Namibia for about $2.3 billion last year.
Northparkes is one of several assets Rio Tinto has put up for sale in a bid to slash $5 billion in costs and shift focus to its most profitable mines. The mining major is also looking to offload its majority stakes in Australia's Coal & Allied and Canada's Iron Ore Company.
"The sale of Northparkes represents great value for our shareholders and demonstrates our continued focus and discipline in the way we allocate capital across the group," said Chris Lynch, CFO at Rio Tinto, in a statement. "Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy."
The deal is subject to Rio Tinto's joint venture partners - Sumitomo Metal Mining and Sumitomo Corporation Mineral Resources, which together own 20% - waiving or failing to exercise their pre-emption rights under the terms of the joint venture agreement.
The sale is also conditional upon regulatory and CMOC shareholder approval. Rio Tinto has already received binding commitments from the two major CMOC shareholders - which between them own 69% of the company - in support of the deal.
CMOC, with a market value of $5 billion, mainly produces molybdenum and tungsten. The company went public last year backed by state-owned Luoyang Mining Group Co and Cathay Fortune, the PE firm of Chinese billionaire Yu Yong.
Cathay Fortune has recently been locked in a long-running takeover battle for Australian copper miner Discovery Metals.
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