JOHANNESBURG (miningweekly.com) – Global mining major BHP has agreed to sell its Cerro Colorado copper mine, in Chile, to private equity manager EMR Capital, the Melbourne-headquartered company announced on Tuesday.
The transaction consists of a cash consideration of $230-million and about $40-million in proceeds from the post-closing sale of certain Cerro Colorado copper inventory, as well as a contingency payment of up to $50-million to be paid in the future.
The agreement with EMR Capital ends a year-long search for a buyer for Cerro Colorado, which is the smaller of BHP’s copper operations in Chile. The group also owns the Spence mine and a 57.5% interest in the flagship Escondida mine, in the Atacama Desert.
In the 2017 financial year, Cerro Colorado produced 64 700 t of copper cathode, compared with 232 000 t of copper cathode and 539 600 t of payable copper from the flagship Escondida operation and 189 600 t of copper cathode from the Spence mine. In August last year, the BHP board approved an investment of $2.46-billion for the development of the Spence Growth Option, to allow the mine to increase production, while extending its useful life by more than 50 years.
BHP sees copper as “an extremely attractive commodity”, but the group has switched its focus to large, long-life operations.
Cerro Colorado only has government approval to operate until 2023.
The sale of Cerro Colorado is subject to financing and customary closing conditions, and is expected to close during the fourth quarter of calendar year 2018.