Marubeni to Pay $1.3 Billion for Copper Mine Stakes (Update2)

Marubeni to Pay $1.3 Billion for Copper Mine Stakes (Update2)

By Brett Foley

April 24 (Bloomberg) -- Marubeni Corp., the Japanese trader of commodities from chemicals to grains, will pay Antofagasta Plc $1.31 billion for stakes in two Chilean copper mines.

Marubeni agreed to pay cash for 30 percent of Minera Esperanza, a mine currently under construction, and the Minera El Tesoro project, London-based Antofagasta said today in a statement. Marubeni will fund its share of Esperanza's development cost, estimated at about $1.9 billion, and Antofagasta will pay the remaining 70 percent.

The acquisition is Marubeni's biggest since 1999 when it bought Drax Power Station for $3.24 billion, according to data compiled by Bloomberg. The transaction will give it a supply of concentrate, a semi-processed raw material shipped to smelters.

The deal ``helps Antofagasta reduce its risk on the project and uses an existing relationship to sell concentrate from Esperanza mine into Asia,'' Charles Kernot, an analyst at Seymour Pierce Ltd. in London who has an ``underperform'' rating on Antofagasta shares, said by telephone.

Copper, used in pipes and wires, has risen for six successive years and traded at a record $8,880 a metric ton on the London Metal Exchange on April 17. Prices have been spurred by supply disruptions and rising demand in China, the world's largest user.

Pakistan Exploration

Antofagasta, which is controlled by Chile's Luksic family, operates three copper mines in Chile, the world's biggest producer. The company also explores for the metal in Pakistan and Africa. Marubeni holds 8.8 percent of the Los Pelambres copper mine, Antofagasta's largest, as part of a group of Japanese investors that own 40 percent in total, Antofagasta spokesman Oliver Winters said in an e-mail.

Japanese companies hold minority stakes in other copper mines in Chile. Mitsubishi Corp., Mitsubishi Materials Corp. and Nippon Mining Holdings Inc. jointly own a stake in Escondida, the world's largest copper mine, operated by BHP Billiton Ltd. A group led by Mitsui & Co. Ltd. owns about 12 percent of Collahuasi, the copper mine controlled by Anglo American Plc and Xstrata Plc.

El Tesoro produced 93,000 metric tons last year. Esperanza is expected to start output at the end of 2010, with an annual capacity of 195,000 tons of copper and 229,000 ounces of gold.