China's antitrust authorities removed the last obstacle to Glencore's $30 billion takeover of miner Xstrata on Tuesday after the commodities trader agreed to sell a $5.2 billion mining project to ease its grip on copper.
Xstrata's Las Bambas mine in Peru had been expected to be sacrificed to secure the approval of China's Ministry of Commerce, but Glencore also agreed 8-year commitments covering the supply of copper, zinc and lead to China.
Chinese regulators have rarely demanded asset sales to improve competition after a major tie-up, but the importance of the metals that Glencore mines and trades for China's economy meant the merger was unlikely to go through without changes.
In particular, Glencore had already signaled that Chinese authorities were focused on its hold on the copper market, and specifically copper concentrate. Glencore and Xstrata combined account for roughly 7 percent of global copper supply.
Glencore, which is now on track to complete the industry's biggest ever deal in two weeks, has to begin the process of selling Las Bambas within three months, and find a buyer by the end of August 2014.
If it does not find a buyer for the asset - a major mine expected to produce an annual 400,000 metric tons of copper for at least four years from 2015 - it will have to find alternatives.
Glencore, which has made no secret of its desire to slash the number of Xstrata mines being built from scratch, will have three months to offer up one of the miner's longer-dated projects instead - namely Tampakan in Peru, Frieda River in Papua New Guinea, El Pachon or Alumbrera in Argentina.
"Them being willing to sell Las Bambas shows there are no sacred cows in the eyes of the Glencore management. It shows they think a little differently - they've always shied away from greenfield projects," analyst Jeff Largey at Nomura said.
"If they can pull value forwards on Las Bambas by selling it - rather than taking on all the operational and execution risk associated with building it (and) bringing it to production - I think the market will reward them."
Satisfying China's appetite for concentrate, an intermediate product that feeds refineries and smelters, Glencore agreed to supply a minimum of 900,000 tonnes of copper to Chinese clients a year for 8 years from 2013. The price for at least 200,000 tonnes will be priced in accordance with the benchmark level.
Glencore also agreed to supply zinc and lead concentrate on "fair and reasonable" terms.
China's green light on Tuesday paved the way for Glencore to tie up at last its long-desired acquisition of Xstrata by next month - 15 months after it was first announced.
But separate news on Tuesday of a stream of departures from Xstrata's management team highlighted the challenges during what will be Glencore's biggest integration to date.
Xstrata announced chief executive Mick Davis would not take up the role of at the combined group for six months, as initially agreed. It also announced the departure of divisional heads including copper boss Charlie Sartain and nickel chief Ian Pearce, along with Thras Moraitis, Xstrata's head of strategy and a close associate of Davis.
"This clearly turned into a takeover rather than a merger. We all knew (Glencore chief executive) Ivan Glasenberg was going to be the top dog, it was just a matter of time," Nomura's Largey said.
Glencore has already cleared regulatory hurdles including the European Union, which instead of copper focused on the group's concentration in zinc.
Glencore had agreed to scrap a European zinc sales with producer Nyrstar , and said on Tuesday it had struck a deal and a termination fee. Nyrstar will buy out Glencore's almost 8 percent equity stake for 3.39 euros a share - below the current price - for a total of 44.9 million euros.
($1 = 0.6531 British pounds)
(Additional reporting by Stephen Eisenhammer and Jane Barrett in London, Michael Martina and Shao Xiaoyi in Beijing; editing by Jonathan Standing and David Stamp)