Sumitomo Metal Mining, Sumitomo Corp. to Get Chile Cu Interest

Sumitomo Metal Mining and Sumitomo Corporation announced on Monday they acquire interest in Chilean copper and molybdenum mine. They purchase 45% share in mine equity holding subsidiary of Quadra FNX Mining of Canada through newly established joint venture with 70% share by Sumitomo Metal Mining and 30% share by Sumitomo Corp for US$ 724 million as contribution to the US$ 2.9 billion mine development. The joint venture secures right to take 50% or annual 110,000 tonnes of produced copper from the mine, which starts operation in 2014.

Sumitomo Metal Mining and Sumitomo Corp. get interest in Sierra Gorda copper project located 140 kilometers northeast of Antofagasta, Chile. Minable reserve for the project is around 1.3 billion tonnes in sulfide ore with total around 5 million tonnes of copper, 300,000 tonnes of molybdenum and 80 tonnes of gold. The project is expected to keep the operation for 20 years.

The project is to produce annual 730,000 tonnes of copper concentrate or 220,000 tonnes of copper and 22,000 tonnes of molybdenum concentrate at average for the 20 years operation. Sumitomo Metal Mining and Sumitomo Corp. secure annual 110,000 tonnes of copper or around 9% of Japanese yearly copper concentrate import.

The project needs around US$ 2.9 billion for the initial cost. They secure project finance from Japan Bank for International Cooperation (JBIC) for the part of the fund while Quadra FNX Mining, Sumitomo Metal Mining and Sumitomo Corp. pay remaining fund for the project. They plan around US$ 800 million of expansion from 2014 to 2017 to increase the daily ore process capacity from 110,000 tonnes to 190,000 tonnes.