BHP, (ASX:BHP) the world's No.1 miner, won't sell its smallest Chilean copper operation this year after all, as would-be buyer EMR Capital Advisors Pty, an Australian private equity firm that invests in natural resources, failed to meet a financing deadline for the $230 million cash deal.
The Melbourne-based mining giant had decided to offload Cerro Colorado mine in May last year, as part of chief executive Andrew Mackenzie's bid to focus on large assets in commodities such as iron ore, copper and oil.
Cerro Colorado mine runs out of copper in 2023, the same year its environmental licence expires.The cash-deal with EMR, announced in June, included a further $40 million in proceeds from copper stocks and about $50 million depending on prices of the metal, bringing the total proceeds BHP is now missing out on to $320 million.
"The decision to put an end to the agreement was taken between the two parties when it was evident that the financing conditions would not be met within the deadline," a BHP official told Reuters on Wednesday.
Cerro Colorado, expected to fetch at least $800 million according Deutsche Bank, runs out of ore in 2023, the same year its environmental licence expires.
The operation, located in Chile's far north, produced about 65,000 tonnes of copper in the year to June 2017. Escondida, BHP's flagship mine located in the same country, yields more than 10 times that amount annually.
The asset has options that could potentially expand its lifespan for decades, but analysts agree it makes more sense for another owner to take it over and put in the work to extend its life, as BHP focuses only on major operations across its key commodities.