Glencore tightens grip on zinc through deal with Canada's Trevali

Tue Mar 14, 2017 9:04am EDT
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By Barbara Lewis and Eric Onstad

LONDON (Reuters) - Miner-trader Glencore (GLEN.L: Quote) has increased its control of core commodity zinc through a deal with Canada's Trevali (TV.TO: Quote) in which it is selling shares in two mines and helping to create the first pure zinc company with wide geographical reach.

Glencore's share price has risen around 13 percent this year, adding to gains of more than 200 percent in 2016 when it rebounded from a commodities price crash.

Its CEO Ivan Glasenberg has said it is well-placed for deals, which analysts say are as likely to involve commodity offtake or tactical disposals as acquisitions.

Through a $400 million transaction, announced late on Monday, Glencore is selling 80 percent and 90 percent stakes respectively in a mine in Namibia and another in Burkina Faso to Trevali with which it has a long-standing relationship.

Glencore will also increase its direct holding in Trevali from 4 percent to 25 percent and gets two seats on the company's board, compared with one before, while securing exclusive rights to market Trevali's zinc.

"We are excited to form part of this unique global zinc vehicle, providing pure zinc exposure across a wide geographic footprint," Daniel Mate, Glencore's head of zinc marketing, said in a statement.

Mark Cruise, CEO of Trevali, said acquiring Rosh Pinah in Namibia and Perkoa in Burkina Faso was "a unique opportunity for Trevali shareholders".

It sets the stage for "a multi-asset, low-cost global zinc producer," whose production will double to approximately 410 million pounds per year. In addition to the African assets, it has mines in Peru and Canada.   Continued...

The logo of commodities trader Glencore is pictured in front of the company's headquarters in Baar, Switzerland, September 30, 2015.  REUTERS/Arnd Wiegmann/File Photo