BHP to divest Cerro Colorado copper mine in Chile to EMR Capital
Mining industry news : BHP , an Australia-based global resources company will sell its Cerro Colorado copper mine in Chile to EMR Capital, a Hong Kong-based specialist resources private equity manager to potentially earn up to $320 million.
The Cerro Colorado copper mine is located in the northern part of Chile, in the Atacama Desert, where it had yielded 65,000 tonnes of copper cathode last year. It is among the two copper mines operated by BHP’s Pampa Norte division with the other one being the Spence copper mine, which had yielded 174,000 tonnes of copper cathode in 2016.
BHP’s Pampa Norte division uses the oxide and sulphide ore treatment, which includes leaching, solvent extraction and electrowinning processes to produce copper cathode from the two Chilean copper mines.
As far as the terms are concerned, EMR Capital has agreed to pay $230 million to BHP after completion of the deal. The specialist resources private equity manager will also pay about $40 million resulting from the sale of certain Cerro Colorado copper inventory after completion of the transaction. Further, BHP, depending on copper price performance, stands to earn up to $50 million in the form of contingent payment in the long run.
Sale of the Cerro Colorado copper mine is anticipated to be wrapped up in the fourth quarter of this year provided it satisfies of financing and customary closing conditions.
Following the sale of the Cerro Colorado copper mine, BHP will be left with the Spence copper mine and also with the Escondida copper mine, located in the Atacama Desert. In the Escondida copper mine, BHP owns 57.5% stake and is partnered by Rio Tinto and others.
Prior to the agreement to sell the Cerro Colorado copper mine to EMR Capital, BHP had last week formally announced its commitment to go ahead with the $3.4 billion worth South Flank iron ore project in Western Australia.