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General Market Commentary
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General Base Metals
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General Market Commentary
Glencore Boosts Zinc Bet With Deal to Buy Peruvian Miner Stake
Glencore Plc is doubling down on its bet on zinc after prices rallied to a 10-year high.
The Swiss commodities giant, already the world’s top zinc miner, is planning to increase its stake in Peru’s Volcan Cia. Minera SAA, the largest producer of the metal in Latin America.
Glencore reached an agreement to buy out members of the Letts family and acquire 27 percent of Volcan’s Class A voting shares for $531 million. It will offer to increase its stake via a public tender for as much 48 percent, which could potentially raise the total price to $956 million, according to a statement on Tuesday.
Volcan’s Class B shares, which are more actively traded, rallied almost 40 percent in the two weeks leading up to the deal. The stock added 6.5 percent to 1.31 Peruvian soles as of 11:40 a.m. local time.
Glencore’s offer price of $1.215 compares with the current value of the Volcan’s A shares of 3.20 soles (98 U.S cents.)
The deal gives Glencore even more exposure to zinc, which has surged on supply cutbacks and China’s tougher curbs on mining. The metal has rallied 26 percent this year, the best performance in the Bloomberg Commodities Index.
“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,” the company said in the statement.