Agrimoney.com | 24 December 2009
China's Zijin Mining Group said it saw its $200m investment in Glencore as a chance to expand its global reach as news of the Swiss giant's potential flotation continued to captivate the commodities sector on Thursday.
Zijin, China's largest gold producer and third-largest copper group, said Glencore's $2.2bn convertible bond issue represented an "opportunity" to invest in overseas mining assets.
Zijin's investment, which is dependent on Beijing approval, comes three weeks after it unveiled a $500m offer for Philippines-based, and Australian-listed, copper producer Indophil Resources.
Other investors in the Glencore bond include US fund giant Blackrock; Singapore's sovereign wealth fund, GIC; and First Reserve, a US private equity group which has made a series of investments in green energy.
Flotation prospects
The bond issue by Glencore - which owns a large portfolio of agricultural interests besides a 34% stake in Xstrata, besides its own mining and trading operations – is being viewed as raising the chances of the company floating, after it emerged in June that the group had held talks with bankers over a listing.
Glencore, in a statement, made a rate mention of flotation, saying its bonds were convertible "into Glencore shares upon a qualifying IPO (initial public offering) or upon other pre-determined qualifying events".
The bond's pricing values the group at $35bn, in line with analysts' forecasts earlier this year. London broker Liberum Capital in June said Glencore could be worth $30bn-40bn.
Bright prospects
Glencore's statement noted bright prospects for the sector, saying that "as economic growth resumes, the outlook for most commodity markets is continuing to improve".
The group's agricultural interests include rice mills in Uruguay, the Moreno Group oilseed crushing operation in Argentina, and farming operations over 300,000 hectares of land in Australia, Kazakhstan, Paraguay, Russia and Ukraine.
It also owns a 1.6% stake in Australian grain handler GrainCorp.
