Australia-based and globally focused South32 said 22 February that it has completed its 45% interest acquisition in the Sierra Gorda copper operation in northern Chile from Sumitomo.
The final price tag was US$1.4 billion cash plus a contingent price-linked consideration component that will be up to $500 million. It will be due when copper production rated in 2022-2025 meet certain production rates and prices.
The transaction was first announced on 14 October 2021 with a pair of binding agreements. At the time, CEO Graham Kerr called the acquisition a “transformative step” for South32.
“We are actively reshaping our portfolio for a low carbon world and the acquisition of an interest in Sierra Gorda will increase our exposure to the commodities important to that transition. Copper is a critical metal in the decarbonisation of the world’s energy networks and has strong long-term market fundamentals,” he noted at the time.
Graham also added that the deal would expand its operating and development presence in the Americas.
The executive said this week that Sierra Gorda will immediately contribute to its earnings, improve its operating margins and give South32 long-term exposure to a metal that is increasingly hard to discover, develop and produce.
“We believe copper will play a key role in the world’s decarbonisation and energy transition,” Graham said.
Situated at a relatively low altitude of 1,700 metres above sea level, the Sierra Gorda mine commenced construction in 2011 and was commissioned in 2014.
The remaining interest in the mine is held by Poland-listed global miner and joint venture partner KGHM Polska Miedz.