Glencore slashes Kazzinc deal; aims to lift stake to 69.6%

Swiss commodities giant Glencore International Plc has decided to increase its stake in Kazakhstan's biggest zinc producer Kazzinc Ltd to 69.6 per cent, cutting down its original plan to raise the stake to 93 per cent.

Baar-Switzerland based Glencore, which already owns a 50.7-per cent stake in the miner, now plans to acquire an additional 18.9 per cent interest in the company from Kazakhstan's private equity firm Verny Capital, increasing the stake in the miner to 69.6 per cent, Glencore said in a statement.

At the time of its initial public offering last year, Glencore had said that the company plans to increase its stake in Kazzinc to 93 per cent for a total consideration of $3.2 billion including $2.2 billion in cash and $1 billion in new Glencore stock. The proposed transaction also carried an option that would have increased Glencore's control in Kazzinc up to 99.4 per cent on certain conditions.

The current deal will involve issue of at least 176 million new Glencore shares. The total valuation including additional shares or cash, solely at the discretion of Glencore, will not exceed $1.4 billion which less than half of the original investment plan.

Ust-Kamenogorsk based Kazzinc has an annual production capacity of 300,000 tonnes of zinc, 130,000 tonnes of lead, and 240,000 tonnes of copper concentrates, besides 1.5 million ounces of gold and 45 million ounces of silver.

Prior to the announcement of the price-sensitive information, Glencore halted trading in its Hong Kong shares Tuesday.