Mubadala Development has bought a 50 per cent stake in a base metals mining interest held by the global trading house Trafigura as part of plans to expand its mining footprint.
The Abu Dhabi investment fund will form a 50-50 joint venture with Trafigura to operate Minas de Aguas Tenidas (Matsa), which has three mines in southern Spain that produce copper, zinc and lead concentrates.
Mubadala did not disclose the value of the deal. However, sources close to the contract said it valued the mines business at about $1.4 billion. "Matsa has a strong competitive position and excellent expansion potential, with capacity expected to more than double over the next two years," said Ahmed Al Idrissi, chief executive of Mubadala Technology and Industry.
“Investing in Matsa is a key step in growing and diversifying our existing metals and mining portfolio.”
Trafigura has undertaken a two-year investment and expansion of Matsa, which is doubling annual processing capacity to 4.4 million tonnes.
“This builds on our existing sector strategy and partnership with Mubadala,” said Jeremy Weir, the chief executive of Trafigura.
“We are identifying new opportunities and investing thoughtfully together, in ways that complement our existing portfolio.”
Since reaching a 2015 high last month, copper has lost about 11 per cent amid concern that appetite for the metal is cooling in China, which accounts for 45 per cent of global demand. Copper for delivery in three months on the London Metal Exchange climbed 0.3 per cent to $5,774.50 a tonne at 12.25pm in Hong Kong on Monday.
Mubadala and Trafigura Group are already partners after completing the acquisition last year of a controlling stake in a Brazilian iron ore port terminal from MMX Mineraçao e Metálicos, in a deal worth about US$955 million.
Last week, Porto Sudeste, west of Rio, was hit by the cancellation of a contract by its only client amid delays as the port operator awaited final regulatory clearance to begin shipments.
Mubadala is also a joint venture partner with the smelter Dubai Aluminium (Dubal) in Guinea Alumina Corporation (GAC), which manages a bauxite and aluminium project in the African country of Guinea, the holder of the world’s top bauxite reserves.
Bauxite from GAC will help to provide raw materials to Emirates Global Aluminium, the world’s fifth-largest aluminium producer.
dalsaadi@thenational.ae
Follow The National's Business section on Twitter