Japanese giant Sumitomo Metal Mining has forked out $615m for a stake in Rio Tinto’s big Western Australian copper discovery.
Japanese giant Sumitomo Metal Mining has forked out US$399 million ($615m) for a stake in Rio Tinto’s big Western Australian copper discovery.
Rio Tinto on Wednesday morning revealed the mining arm of the $41-billion Sumitomo group had agreed to buy a 30 per cent slice of the remote Pilbara copper field discovered in 2017.
The deal values Winu at about US$1.3 billion ($2bn) and will see Rio Tinto stay on as mine operator once it is built.
Rio Tinto copper chief executive Katie Jackson said the investment from Sumitomo de-risked the project.
“We share a long history with Sumitomo Metal Mining as partners and deeply value the commitment they will bring to the Winu project,” she said.
“We look forward to working more broadly as strategic partners to find new ways to deliver value across the metals and minerals supply chain.
“We will continue to advance the Winu project in close partnership with the Nyangumarta traditional owners and the Karlkayn airstrip with the Martu traditional owners, in a way that benefits all parties.”
Sumitomo is no stranger to Rio Tinto, with the two companies working on a hydrogen plant in Queensland and having previously invested together in the Northparkes copper mine in New South Wales.
Rio Tinto sold its stake in that project in 2013, and it is now controlled by Evolution Mining.
Sumitomo Metal Mining mineral resources general manager Hideyuki Okamoto said the company was excited about further opportunities for collaboration with Rio Tinto.
“We look forward to renewing our long-standing relationship with Rio Tinto by partnering on the highly attractive Winu Project,” he said.
Under terms of the deal $195 million will be paid upfront to Rio Tinto, with the balance likely to be paid after 2030 pending milestones and adjustments to be agreed on by the two parties.
A letter of intent to build a broader partnership on battery metals has also been signed.
Sumitomo’s downstream processing capabilities include battery manufacturing, for which copper is a key ingredient.
The company aims to produce 300,000 tonnes of copper per year and holds stakes in assets outside of Australia in Chile, Arizona, and Peru.
RBC Capital Markets acted as financial adviser for the deal, and Herbert Smith Freehills as legal adviser.
Initially earmarked to come online in 2023, Winu is currently wading through the environmental approvals and pre-feasibility study processes.
The pre-feasibility study is due next year and is based on an initial processing capacity of up to 10 million tonnes per year.
Early numbers have Winu carrying an estimated 503-million-tonne resource and an estimated mine life of more than 40 years.
