Glencore holds zinc assets in Bolivia. Credit: Glencore.

Glencore has agreed to divest its zinc business in Bolivia to Canada’s Santa Cruz Silver Mining in a deal worth about $110m.

Santa Cruz Silver Mining will buy the Glencore holding companies that own the Bolivia zinc assets.

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The assets include Glencore’s 45% stake in Sociedad Minera Illapa, which is controlled by the state-owned Corporación Minera de Bolivia.

Glencore’s Bolivia unit also holds a 100% stake in Sinchi Wayra, which owns the Tres Amigos, Reserva and Colquechaquita mines.

Sinchi Wayra also owns the Don Diego concentrator and power plants as well as the Sorocaya project and San Lucas.

According to the deal terms, Glencore will receive $20m as an initial amount on the date of completion. The initial consideration amount is subject to customary working capital adjustments.

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The Canadian firm will pay a further $90m within four years of the completion of the deal.

Subject to receipt of certain regulatory approvals in Canada, the transaction is expected to be completed within the next three months.

Upon completion of the deal, Glencore intends to sign net smelter royalty agreements with Santa Cruz, each at 1.5%, with regard to the Bolivian mining business.

This is expected to provide continued life of mine payments based on the performance of the relevant mines, Glencore said.

Additionally, Glencore will hold offtake rights pertaining to the production of the relevant mines during their operational life.

Glencore selected BMO Capital Markets as its financial advisor for the transaction.