Under the deal, the Hong Kong-based private equity firm will pay US$230 million for the mine, plus about US$40 million through the sale of copper stockpiled at the operation and up to US$50 million in the future depending on the performance of the copper price.
The deal is expected to close by the end of the year.
"We are very excited by the acquisition of Cerro Colorado. It is a copper mine of scale with high potential and a promising future," EMR's managing director Jason Chang told Mining Journal.
The mine, BHP's smallest, has reportedly been up for sale for more than a year as the mining giant slims down to focus on its largest and most profitable operations.
According to mining analyst Edward Sterck of BMO Capital Markets, the price of up to US$320 million represents a good price for BHP given the operation's limited reserves and mine life.
However, the price is significantly lower than estimates of up to US$800 million made since BHP let it be known that it could sell the mine and that might disappoint the market, the analyst said in a research note.
The deal is just the latest for EMR which former Oxiana Resources MD Hegarty set up to seek opportunities in three key commodities: copper, gold and hard coking coal.
The fund has been particularly busy over the past year.
In April, EMR unveiled a deal with Indonesia's Adaro Energy to buy the Kestrel coal mine in Queensland from Rio Tinto for US$2.25 billion. Last August it bought the Lubambe copper mine in Zambia from African Rainbow Minerals and Vale International for US$97 million and in March last year, it acquired the Golden Grove zinc-copper mine in Western Australia from MMG for US$210 million.
EMR's enthusiasm for copper, shared by most of the industry, is based on an expected market shortfall, as falling ore grades, rising production costs and a lack of new projects squeeze future supply, Chang explained.
However, realizing Cerro Colorado's potential could require significant investment.
According to BHP, the SX-EW operation has reserves totalling 76 million tonnes (average grade 0.59% Cu), suggesting a remaining mine life of about six years. Production has also been declining, from over 100,000t of copper a decade ago to just over 66,000t in 2017.
The life of the mine could be extended through the development of a hypogene deposit lying beneath the current operation. In 2015, BHP told analysts it had an indicated resource of 281Mt with an average ore grade of 0.58%.
Chang said EMR had "detailed plans" in place to turn around production at the operation as well as realize the operation's long-term potential, although they remain under wraps for now.
Developing the sulphide resource is likely to require the construction of a new concentrator plant while the lack of water resources in arid northern Chile could necessitate the installation of a desalination facility, implying an investment of up to US$3 billion, Sterck said.
Despite the potential hurdles, Chang told Mining Journal that EMR felt very comfortable in Chile.
"It's a tier-one mining district, one of the best… we look forward to working closely with the entire workforce, local management, community and government," he said.
The company already owns the Red Hill project which is exploring former mines in Chile's southern-most Magallanes region.