Glencore bets on copper with $21M investment in Brazilian producer

Glencore (LON:GLEN) has placed a multi-million-dollar bet on copper by investing just over US$21 million (GBP 16.16 million) into Brazilian copper producer Paranapanema (PMA).

The Swiss commodities trader and miner said on Friday that the agreement will help Paranapanema to support its capital and debt restructuring, according to a press release.

In return the company will take a 5% stake in PMA, which is Brazil’s sole and one of the world’s largest producers of refined copper products with an installed capacity of 280,000 tonnes of copper cathode per annum. Glencore will also be allowed to appoint a director to the PMA board.

The investment comes three weeks after Glencore lost a bidding war with Chinese-backed Yancoal for Rio Tinto's Australian coal assets. 

Glencore first tried and failed buying Coal & Allied in 2015, when Rio declared coal a non-core asset, hence no longer part of its growth strategy.

In January this year, Rio agreed to sell its interest in Coal & Allied to Yancoal for $2.45 billion. The terms of that deal allowed Rio to engage in negotiations with another party if it made a better offer.

The Telegraph noted that Glencore has turned bullish on copper following its March annual report that said a "wall of copper" had failed to emerge on world markets for the red metal.

"The prospect of demand growth across Asia, Europe and the US, as well as the likelihood of difficult labour contract negotiations at some of the industry’s major mines over the coming year, suggest that pricing risks lie to the upside in 2017," the report said.