Sumitomo Metal Mining Co Ltd and Sumitomo Corp have agreed to sell their combined 45% stake in the Sierra Gorda copper mine in Chile to Australian mining company South32 for US$1.55 billion. South32 has mandated UBS, BoA and Mizuho to arrange a US$1 billion acquisition facility.

Sumitomo Metal, which has a 31.5% stake in the mine, said it hopes the transaction will be completed by March. Trading company Sumitomo Corp holds a 13.5% stake. The two have been looking for a buyer for some time, having incurred heavy losses on the project. Sierra Gorda is co-owned with Polish state-controlled company KGHM, which is listed on the Warsaw Stock Exchange.

The Sierra Gorda open pit mine is located in the Atacama Desert in the Antofagasta region, approximately 60 kilometres southwest of the city of Calama in the north of Chile, at an altitude of approximately 1,700 metres. The Catabela area is currently being exploited with a target mining depth of approximately 1,000 metres.

The mine produced 149,000 tonnes of copper concentrate in the year to March 2021 and plans to produce 180,000 tonnes this year.

The deal gives Perth-based South32 an entry to the world’s top copper-producing country.

“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,” says South32 chief executive officer Graham Kerr.