TOKYO (Reuters) - Japan’s Mitsubishi Materials Corp said on Friday it had completed its purchase of a 30% stake in Chile’s Mantoverde copper mine from Mantos Copper for $275 million, as the shift to a low carbon economy boosts demand for the metal.
Japan’s third-biggest copper smelter also said $520 million in project finance had been completed.
In a separate statement, Mantos Copper said the deal was the largest project finance completion in the mining sector since the onset of COVID-19.
Demand for copper, the price of which hit an eight-year high this week, is expected to soar as the highly-conducting metal is needed for the shift to a lower carbon economy.
The $275 million investment includes a pro-rata portion of construction capital expenditure as well as adjustments for working capital since last February, Mitsubishi said in a statement.
It announced plans to buy the stake last year to secure concentrate for its smelters.
The acquisition was subject to conditions including an arrangement for project finance, which was completed with six banks on Friday, a spokesman said, without identifying the lenders.
As part of the deal, Mitsubishi Materials agreed to provide a $60 million credit facility to cover potential cost overruns until completion of the project, which provides the company with incremental copper concentrates it produces.
As a result, on top of an offtake entitlement from its 30% stake, Mitsubishi Materials expects to be entitled to about 42% of the copper concentrate from the project, it said.
The mine has 2.1 million tonnes of copper reserves and is owned by a consortium led by British investment company Audley Capital Advisors and Orion Mine Finance, which control Mantos Copper.
The partners plan to spend $784 million to expand facilities and build a concentrator to extract and process sulphide ore, with an aim to start production in 2023.
The expansion will see Mantoverde produce an average of 110,000 tonnes of copper and 33,000 ounces of gold per year from 2023 to 2030, Mantos Copper said.
Reporting by Yuka Obayashi, additional reporting by Zandi Shabalala in London; editing by Jason Neely and Barbara Lewis