Rio Tinto and First Quantum Minerals have formed a joint venture to advance the development of Peru’s La Granja copper project, one of the world’s largest undeveloped copper deposits.
La Granja is a complex orebody with the potential to be a substantial, long-lasting operation. It is situated at a high altitude in Cajamara, Northern Peru, and has a published Indicated and Inferred Mineral Resource totalling 4.32 billion tonnes at 0.51% copper. The joint venture will advance the project by combining the resources, knowledge, and experience of Rio Tinto and First Quantum.
Under the proposed deal, First Quantum will acquire a 55% stake in the project for $105 million and pledge to invest up to an additional $546 million in the joint venture to cover all capital and operating expenses necessary to move the project from the feasibility stage to the development stage. All additional expenses will be allocated pro rata based on the portion of ownership of the project after the sole funding commitment is fulfilled.
The transaction is anticipated to be completed by the end of Q3 2023, provided all regulatory requirements are met. First Quantum will thereafter manage the La Granja project as its primary owner, with the initial effort going towards finishing the feasibility study.
Rio Tinto acquired the La Granja copper project from the Government of Peru in 2006 and has since conducted an extensive drilling program that has significantly increased the declared resource and understanding of the orebody and established partnerships with host communities, and local and national governments.
“La Granja is an exciting but complex project that has the potential to be a significant new source of the copper that is needed for the energy transition. We are pleased to enter into this agreement with First Quantum, that will bring our combined development capabilities and deep knowledge of La Granja to progress the project,” Rio Tinto Chief Executive Bold Baatar said.
According to Baatar, This collaboration highlights not only La Granja’s potential as a significant copper producer but also Peru’s status as one of the world’s most crucial mining investment locations. Baatar stated that developing La Granja would also add to Rio Tinto’s copper portfolio, which has already been strengthened by the acquisition of Turquoise Hill Resources and the start of underground mining at Oyu Tolgoi in Mongolia.
First Quantum Chief Executive Officer Tristan Pascall said: “I am very pleased to announce today’s partnership with Rio Tinto, a global leader in the mining industry. Rio Tinto’s work on La Granja has been extensive to date and we share our partner’s view that the project has the potential to be a Tier 1 copper mine. We look forward to working together to build on this foundation, leveraging First Quantum’s core strengths in mine design, project development and community engagement to progress La Granja to the next stage. First Quantum is excited about broadening our existing relationships in Peru and we are appreciative of the support provided by the Government of Peru to this important partnership for its future major investment in the country.”
Rio Tinto and First Quantum have also signed a memorandum of understanding for worldwide strategic partnership in copper and other base metals exploration, project development, and information and technical know-how sharing around best-in-class mining, processing, and decarbonisation.
