Sumitomo Metal Mining, a Japan-based mining firm, has decided to acquire Freeport-McMoRan's interest in Morenci joint venture. Freeport-McMoRan has signed a definitive deal with Sumitomo in order to sell its 13% interest in Morenci for $1 billion in an all-cash offer.
Currently, the US miner owns 85% interest in Morenci unincorporated, while Sumitomo Metal Mining Arizona (SMMAz) has 15% interest in the joint venture. Upon completion of the deal, Freeport-McMoRan will own 72%, SMMAz will hold 15% and a subsidiary of SMM will own the rest 13% in the joint venture.
The company expects the acquisition, which depends on regular closing condition and other regulatory approvals, to end in the middle of 2016. Freeport-McMoRan intends to utilize the transaction proceeds to repay its bank loans as well as a revolving credit facility. In addition, the US-based miner anticipates posting a gain of about $550 million on the acquisition deal. The company expects to operate losses to balance the cash taxes related to the deal.
In 2015, revenues from the company's 85% share in Morenci joint venture amounted to $2.2 billion, while the delivery and production expenses totalled $1.5 billion. Freeport's 85% share of total recoverable reserves amounted to 12 billion pounds of copper during the period of December 31, 2015. The company's 2015 production from its 85% share in Morenci joint venture totalled around 900 million pounds of copper.
Sumitomo Corp, a member of the Sumitomo group, said that it will be partnering with the subsidiaries of Seibu Holdings to track the "Tokorozawa Station East Side Building Plan" in the location near Seibu's Saitama Prefecture. Nearly 96,000 people use this Tokorozawa station on a daily basis. The Tokorozawa location is expected to have many developments both in the residential and commercial environment.
The goal of the plan is to provide commercial amenities to Tokorozawa station's users and to offer the high quality lifestyle to the residents of Tokorozawa location. The plan involves two phases, the Phase 1 is focused on the improvements of business storefronts and Phase 2 is focused on the fixing of fresh ticket gates within the Tokorozawa station as well as on the growth of commercial storefronts.
Sumitomo Metal Mining in its 2015 business plan statement said that its long-term goal is to become a global leader in the non-Ferrous metals market. Sumitomo Metal also noted that it aim to achieve its long-term net sales target of yen 1 trillion and net income, recurring profit, of yen 100 billion. The Japan-based firm said that it will work hard to accomplish its goal in the long run.
Freeport-McMoRan has partnered with a well-organised firm of Japan, which core business includes mining, construction, transportation, chemicals and energy. The acquisition will enable the US miner to repay its debt and improve its balance sheet.
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