Chinalco drops out of race for Glencore copper mine in Peru

Chinalco, the country's largest aluminum producer by output, has dropped out of the race for Glencore Xstrata's $5.9 billion Las Bambas copper mine in Peru, leaving Minmetals as the front-runner, sources familiar with the matter said.

Commodities trader Glencore agreed this year to sell Las Bambas to secure approval from China's competition authorities for its takeover of miner Xstrata because Beijing feared the merged group would have too much power over the copper market.

A Chinese buyer has been considered a virtual certainty since Las Bambas was put on the block, given the deep pockets of the country's State-owned enterprises and China's hunger for copper - it is already the world's top consumer of the metal.

Leading Western miners, by contrast, are under pressure from many investors after ambitious boom-time deals soured and have moved away from complex multibillion-dollar projects such as Las Bambas, one of the largest copper mines to be sold in recent years.

China had also been expected to anoint a preferred bidder - its usual practice - rather than allow Minmetals and Chinalco to submit competing final offers.

"It's not a reflection on Chinalco per se; Minmetals won the lobbying. The NDRC (the National Development and Reform Commission) had to make a decision to anoint a favored bidder. They weren't going to allow two binding bids," one of the sources said.

Chinalco Mining and MMG - the Hong Kong-listed offshore arm of China Minmetals Corp which is bidding - declined to comment. Glencore also declined to comment.

Chinalco is already present in Peru with its Toromocho copper mine, but MMG was seen as having more experience of integrating large Western businesses, the sources said.