* Biggest copper deal since Glencore's Las Bambas sale
* Freeport has sold $4 bln assets since start of 2016
* China Molybdenum strikes second deal in two weeks
* China's outbound deals near $100 bln
* Lundin Mining has right of first offer on Tenke (Adds analyst comment, stock move, deal terms)
By Anet Josline Pinto and Denny Thomas
May 9 (Reuters) - Freeport-McMoRan Inc has agreed to sell its majority stake in the Tenke copper project in the Democratic Republic of Congo to China Molybdenum Co Ltd (CMOC) for $2.65 billion in cash, reducing the U.S. miner's debt and handing the Chinese company one of the world's prized copper assets.
The deal is a vote of confidence in copper, which many consider a bright spot among base metals. It is also the biggest copper deal since Glencore sold its Las Bambas mine in Peru for $6 billion in 2014.
The China Moly acquisition, its second in as many weeks, comes days after Rio Tinto approved a $5.3 billion underground expansion of the Oyu Tolgoi copper mine in Mongolia..
Even though copper prices are languishing near seven-year lows due to a supply glut, the recent corporate activity is a sign some investors are willing to call a bottom on the commodities cycle and expect a copper deficit ahead.
The deal is "further evidence of what China sees as a fair long-term copper price, which is north of where current levels are trading," said Paul Gait, senior research analyst at Bernstein Investment Research in London.
Freeport, like other big miners, has been selling assets to cut debt, while China has been snapping up commodity assets around the world to feed its massive economy.
The deal takes China's announced outbound M&A tally to about $100 billion in 2016, nearing last year's record $104 billion. It is China Moly's largest outbound deal to date.
Freeport shares fell 8 percent to $10.80 in New York, in line with other big miners as copper hit its lowest in nearly a month.
Shareholders have put many companies on notice, piling on pressure to sell assets to repair their balance sheets. Including this deal, Freeport, which has debt of nearly $21 billion, has sold about $4 billion worth of assets this year. The Phoenix, Arizona-based miner needed to sell $3 billion of assets by mid-year to keep its debt unsecured.
"It is a good price for the asset and it significantly improves their liquidity and their balance sheet," Jefferies analyst Christopher LaFemina said.
The deal follows Freeport's sale in February of a 13 percent stake in its Morenci copper mine in Arizona to Sumitomo Metal Mining for $1 billion.
Tenke Fungurume, in the southern Congolese copper belt, is one of the world's largest copper deposits. Producing since 2009, it is 56 percent owned by Freeport, with a 24 percent stake held by Lundin Mining and a 20 percent stake by Gecamines, Congo's state mining firm.
Toronto-based Lundin has a right of first offer on any change of control transaction over Tenke. The offer is open for 90 days once the company receives notice, which it hasn't yet, spokesman John Miniotis said in an email. "Lundin will carefully evaluate all options for its stake in Tenke and will update the market in due course," he said.
The mine is one of Freeport's prize assets, along with Morenci, Cerro Verde in Peru and Grasberg in Indonesia, but it had deferred development and expansion plans due to sluggish copper prices.
Freeport also slashed planned capital spending at Tenke for 2016 by 50 percent, alongside initiatives to reduce administrative costs.
China relies heavily on imported copper for its smelters and Chinese companies have been looking to buy overseas mines.
CMOC, one of China's largest producers of molybdenum, agreed last month to pay $1.5 billion to buy Anglo American Plc's niobium and phosphates business in Brazil. The company told the Financial Times last week it had more than $4 billion to pursue acquisitions, betting that the commodities cycle had bottomed.
Freeport said it would receive another $60 million from China Moly if the average copper price exceeds $3.50 per pound and $60 million if the average cobalt price exceeds $20 per pound between 2018 and 2019.
The U.S. miner agreed to sell its 70 percent stake in TF Holdings Ltd, a Bermuda holding company that indirectly owns an 80 percent interest in Tenke Fungurume Mining SA.
Freeport also said it agreed to negotiate exclusively with China Moly for the sale of its interests in Freeport Cobalt, including the Kokkola Cobalt Refinery in Finland and the Kisanfu Exploration project in the DRC.
Citigroup advised China Moly on the deal, according to sources familiar with the matter. (Reporting by Anet Josline Pinto in Bengaluru and Denny Thomas in Hong Kong; Additional reporting by Nicole Mordant in Vancouver and Barbara Lewis in Brussels; Editing by Peter Graff and Meredith Mazzilli)