Source: Thinkstock
Glencore must sell a Peruvian copper project being developed by Xstrata by September 2014. But a more central condition is that the combined company must “offer to supply” its current Chinese customers an average copper concentrate volume of 900,000 metric tons under long-term contracts annually for eight years, beginning on January 1 of this year. There is also an eight-year requirement for sales of zinc and lead concentrates under both long-term and spot contracts.
Glencore has been directed to hire an “independent monitoring trustee,” whose job it will be to see that the company lives up to these agreements.
The Chinese also set some price controls:
The price for a minimum of 200,000 dry metric tonnes of copper concentrate will be offered in accordance with the applicable annual benchmark price agreed between major miners and major smelters during annual supply negotiations and the price for the remaining 700,000 dry metric tonnes of copper concentrate will be offered with reference to the applicable annual benchmark price.
In other merger-related news, Xstrata CEO Mick Davis has declined the offer to assume the role of chief executive and executive director of the merged company. Essentially he would have been paid for six months and then shown the door. Davis has some pride. Glencore’s CEO, Ivan Glasenberg, will become the CEO of the merged company as soon as the merger is completed.
Glencore now expects the effective date of the merger to be May 2, and the issuance and trading of new Glencore shares will begin on the London Stock Exchange on May 3.
Glencore made its offer for Xstrata, of which it already owned about 40%, in February of 2012. It just seems longer ago than that.
Glencore’s statement is available here.
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