LONDON (Reuters) - Anglo American said on Thursday it had agreed that Japan’s Mitsubishi Corp should raise its stake in the Quellaveco copper project in Peru by 21.9 percent for $600 million, taking its holding to 40 percent.
Mark Cutifani, Anglo American’s chief executive, who wants higher levels of partnership to spread the risk and cost of developing new assets, said in a statement the sale aligned with “a disciplined approach” to capital allocation.
Anglo American will retain a 60 percent stake in the project which has an implied full value of $2.74 billion. Sources had previously told Reuters they expected Anglo American to sell up to 30 percent of the copper project.
The payment of $600 million is broken down into $500 million on completion of the deal, $50 million when processing rates at Quellaveco reach at least 150,000 tonnes per day and $50 million when rates reach at least 180,000 tonnes per day.
The transaction is expected to be closed in the third quarter of this year, subject to regulatory approvals and endorsement by Mitsubishi’s board.
Anglo American’s board also has to authorize going ahead with the Quellaveco project.
Approval is widely expected over the coming weeks and would kick off what the industry says is a much needed large new copper project after the commodity price crash of 2015-16 led to reduced spending and reduced exploration.
Reporting by Barbara Lewis; editing by Jason Neely and Alexander Smith