Xstrata issue clarified

 By GYNNIE KERO

THE sale of Glencore Xstrata’s share of 80% in the Frieda River project to PanAust is subject to a couple of conditions yet to be reached, Highlands Pacific managing director and chief executive John Gooding said.

Gooding was reacting to speculation that the Beijing-ordered sale by Glencore Xstrata of its US$6 billion (K14.5 billion) Las Bambas copper project in Peruis has placed PanAust, Highlands Pacific and Indophil on high alert. 

As reported in The Australian recently, the sale of Las Bambas as a condition of Chinese approval of last year’s merger between Glencore and Xstrata – affected the plans of all three companies in their multi-billion-dollar copper-gold projects in PNG (PanAust and Highlands) or in the Philippines (Indophil).

Gooding said: “When Glencore and Xstrata wanted to merge last year, they had to get approval from respective countries in which they both operated.

“While receiving approval from European Union countries and others, the Chinese Ministry of Finance and Commerce (MOFCOM) required that Las Bambas, a new big copper mine being developed in Chile by Xstrata at the time, be sold by mid next year before they would agree to the merger. 

“If  an agreement for the sale of Las Bambas was not signed by mid-year (2014), then the Chinese had the right to decide whether another of the copper projects in Xstrata’s stable including Frieda River, would be sold instead.”

Gooding said the whole merger of Xstrata and Glencore seemed to be contingent on the sale of Las Bambas or another of their copper projects. 

“We believe that the sale process for Las Bambas is fairly mature and will be consummated in the not too distant future from what we read. 

“Once Las Bambas is sold (probably to a Chinese company). then the merger of Xstrata and Glencore should become unconditional as it would satisfy MOFCOM’s requirements, and then so does the sale of Frieda River to PanAust become unconditional.

“In the meantime if MOFCOM approves the sale of Frieda River to PanAust first then that also would be very good for all the stakeholders in Frieda River and the people of PNG as it reduces any uncertainty with regards to timing.

“We are very confident that the sale process of both Las Bambas and Frieda River is robust and that PanAust will be very good partners as they have the track record and capability to deliver this world class project,” Gooding added.

Highlands Pacific owns 20% share in the Frieda River gold and copper project located on the border of Sandaun and East Sepik provinces.