* Biggest copper deal since Glencore's Las Bambas sale
* Freeport has sold $4 bln assets since start of 2016
* China Molybdenum strikes second deal in two weeks
* China's outbound deals near $100 bln
* Lundin Mining has right of first offer on Tenke
(Adds analyst comment, stock move, deal terms)
By Anet Josline Pinto and Denny Thomas
May 9 (Reuters) - Freeport-McMoRan Inc FCX.N has agreed to
sell its majority stake in the Tenke copper project in the
Democratic Republic of Congo to China Molybdenum Co Ltd (CMOC)
603993.SS for $2.65 billion in cash, reducing the U.S. miner's
debt and handing the Chinese company one of the world's prized
copper assets.
The deal is a vote of confidence in copper, which many
consider a bright spot among base metals. It is also the biggest
copper deal since Glencore GLEN.L sold its Las Bambas mine in
Peru for $6 billion in 2014.
The China Moly 3993.HK acquisition, its second in as many
weeks, comes days after Rio Tinto RIO.AX RIO.L approved a
$5.3 billion underground expansion of the Oyu Tolgoi copper mine
in Mongolia.
Even though copper prices are languishing near seven-year
lows due to a supply glut, the recent corporate activity is a
sign some investors are willing to call a bottom on the
commodities cycle and expect a copper deficit ahead.
The deal is "further evidence of what China sees as a fair
long-term copper price, which is north of where current levels
are trading," said Paul Gait, senior research analyst at
Bernstein Investment Research in London.
Freeport, like other big miners, has been selling assets to
cut debt, while China has been snapping up commodity assets
around the world to feed its massive economy.
The deal takes China's announced outbound M&A tally to about
$100 billion in 2016, nearing last year's record $104 billion.
It is China Moly's largest outbound deal to date.
Freeport shares fell 8 percent to $10.80 in New York, in
line with other big miners as copper hit its lowest in nearly a
month. PILE
Shareholders have put many companies on notice, piling on
pressure to sell assets to repair their balance sheets.
Including this deal, Freeport, which has debt of nearly $21
billion, has sold about $4 billion worth of assets this year.
The Phoenix, Arizona-based miner needed to sell $3 billion of
assets by mid-year to keep its debt unsecured.
"It is a good price for the asset and it significantly
improves their liquidity and their balance sheet," Jefferies
analyst Christopher LaFemina said.
The deal follows Freeport's sale in February of a 13 percent
stake in its Morenci copper mine in Arizona to Sumitomo Metal
Mining 5713.T for $1 billion.
Tenke Fungurume, in the southern Congolese copper belt, is
one of the world's largest copper deposits. Producing since
2009, it is 56 percent owned by Freeport, with a 24 percent
stake held by Lundin Mining LUN.TO and a 20 percent stake by
Gecamines, Congo's state mining firm.
Toronto-based Lundin has a right of first offer on any
change of control transaction over Tenke. The offer is open for
90 days once the company receives notice, which it hasn't yet,
spokesman John Miniotis said in an email. "Lundin will carefully
evaluate all options for its stake in Tenke and will update the
market in due course," he said.
The mine is one of Freeport's prize assets, along with
Morenci, Cerro Verde in Peru and Grasberg in Indonesia, but it
had deferred development and expansion plans due to sluggish
copper prices.
Freeport also slashed planned capital spending at Tenke for
2016 by 50 percent, alongside initiatives to reduce
administrative costs.
China relies heavily on imported copper for its smelters and
Chinese companies have been looking to buy overseas mines.
CMOC, one of China's largest producers of molybdenum, agreed
last month to pay $1.5 billion to buy Anglo American Plc's
AAL.L niobium and phosphates business in Brazil. The company
told the Financial Times last week it had more than $4 billion
to pursue acquisitions, betting that the commodities cycle had
bottomed.
Freeport said it would receive another $60 million from
China Moly if the average copper price exceeds $3.50 per pound
and $60 million if the average cobalt price exceeds $20 per
pound between 2018 and 2019.
The U.S. miner agreed to sell its 70 percent stake in TF
Holdings Ltd, a Bermuda holding company that indirectly owns an
80 percent interest in Tenke Fungurume Mining SA.
Freeport also said it agreed to negotiate exclusively with
China Moly for the sale of its interests in Freeport Cobalt,
including the Kokkola Cobalt Refinery in Finland and the Kisanfu
Exploration project in the DRC.
Citigroup (NYSE:C) C.N advised China Moly on the deal, according to
sources familiar with the matter.