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Glencore to raise stake in Peru-based zinc miner Volcan

EBR Staff Writer Published 04 October 2017

Glencore has agreed to acquire an additional stake worth about $531m in Peruvian zinc miner, Volcan Compañia Minera.

The Swiss-based miner has offered to buy a maximum additional stake of 48.19% for $956m depending on the acceptance of the Volcan shareholders in what will be an all-cash deal. In this regard, Glencore will be offering $1.215 per each share to certain Volcan shareholders to raise its current stake of 18.11%.

Glencore says that the transaction aligns with its financial policy.

The company stated: “Volcan’s operations are located in the richest polymetallic production area in Peru, producing some of the highest quality zinc concentrates.

“The transaction will provide an increase and extension of Glencore’s zinc production profile and the opportunity for synergies with Glencore’s existing Peruvian zinc operations.”

Post transaction, Glencore would be in a position to expand its overall stake in the range of 44.84-66.30%.

Volcan has been in the mining business since 1943 and has been a leading producer of zinc, lead and silver globally. All its operations are confined to the Peruvian Andes mountain range.

Volcan’s operating facilities comprise 10 mines to go along with seven concentrator plants and an oxides leaching plant. Its operating units include Yauli, Chungar, Cerro de Pasco and Alpamarca.

Glencore has been a stakeholder in Volcan since 2004 and currently holds an economic stake of 7.68% in the Peruvian company.

The miner will fund the acquisition through its existing cash resources and is expected to close the offer in November or December this year.

In late July, Glencore entered into a transaction to buy a stake of 49% in the Hunter Valley Operations (HVO) coal mine in New South Wales, for $1.14bn.

Prior to that, in June, Glencore made a failed offer of $2.67bn to acquire Coal & Allied Industries, a wholly-owned subsidiary of Rio Tinto.

Image: Glencore offers to buy more stake in Peruvian zinc miner Volcan. Photo: courtesy of Glencore.