Grupo Mexico Considers Bid for First Quantum’s Spanish Copper Mine
First Quantum Minerals seems to continue divvying its assets as the Canadian miner is reportedly actively exploring options to sell its Las Cruces mine in southern Spain.
Sources familiar with the matter, who requested anonymity, disclosed that Grupo Mexico, led by Mexican billionaire German Larrea, is among the contenders eyeing the acquisition, in a move to enhance its European presence after a previous unsuccessful attempt in 2021.
First Quantum’s decision to sell the Las Cruces mine, valued at less than $1 billion, comes as the company grapples with financial uncertainty following the shutdown of its major operation in Panama. The closure has prompted analysts to recommend asset sales to reinforce First Quantum’s balance sheet, with the Cobre Panama mine contributing 78% of the company’s operating profit in the first nine months of the previous year, as per company filings.
Shares of First Quantum saw a modest uptick in Toronto, indicating cautious investor optimism, while Grupo Mexico experienced a small dip in Mexico City. Both companies declined to provide official comments on the ongoing developments.
Grupo Mexico’s interest in the Las Cruces mine presents an opportunity for the conglomerate to rebound from its failed bid for the Minas de Aguas Tenidas mining operation in 2021, which was acquired by Australian producer Sandfire Resources Ltd. for approximately $1.9 billion. If successful in acquiring Las Cruces, Grupo Mexico could extend its European footprint and tap into the potential of the copper market amid expectations of increased demand due to the global energy transition.
The Las Cruces mine, currently undergoing a transition from an open-pit to an underground operation, is poised to extend its operational life by 18 years or more, according to a company presentation. The transition includes the development of a refinery capable of producing around 72,000 tons of copper cathode annually, enhancing its value as a strategic asset.
The miner continues to be the center of acquisition rumors, with Barrick Gold reportedly engaging in talks with major investors to gauge support for a potential takeover. The Canadian copper producer has faced significant challenges, leading to a drastic drop of over 50% in its market value.
First Quantum is also reportedly engaged in discussions to sell a stake in its Zambian copper mines to Chinese state-owned Jiangxi Copper Corp, aiming to strengthen its financial position. Details of the potential transaction are still being negotiated, and it remains uncertain whether the talks will lead to a finalized agreement, the source stated. The discussions were initiated last month following a setback in Panama, where First Quantum was mandated to shut down one of the world’s largest copper mines.
Copper assets have become a focal point for mining companies anticipating a surge in demand amid the ongoing energy transition. The positive outlook for the copper market has already catalyzed increased deal-making within the industry.
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