Rio Tinto and First Quantum Minerals have entered into an agreement to form a joint venture that will work to unlock the development of the La Granja copper project in Peru, one of the largest undeveloped copper deposits in the world.
The two Tier 1 miners have also entered into a memorandum of understanding for strategic cooperation globally in copper and other base metals exploration and project development, as well as for sharing information and technical know-how around best-in-class mining, processing, and decarbonisation. First Quantum as an example is the most experienced mining company operating today in applying trolley assist trucking to its operations – including at Cobre Panama, Sentinel (pictured) and Kansanshi.
La Granja is a complex copper sulphide orebody located at high altitude in Cajamara, northern Peru, that has the potential to be a large, long-life operation, with a published Indicated and Inferred Mineral Resource totalling 4.32 billion tonnes at 0.51%. The joint venture will bring together the combined knowledge, expertise and resources of Rio Tinto and First Quantum Minerals to progress the project.
Under the proposed transaction, First Quantum will acquire a 55% stake in the project for $105 million, and commit to further invest up to $546 million into the joint venture to sole fund capital and operational costs to take the project through a feasibility study and toward development. Upon completion of the sole funding commitment, all subsequent expenditures will be applied on a pro-rata basis according to the share ownership of the project.
The transaction is expected to complete by the end of Q3 2023, subject to the satisfaction of regulatory approvals. As majority owner, First Quantum will then operate the La Granja project with initial work focussed on completing the feasibility study.
First Quantum also has its Haquira undeveloped copper deposit in Apurimac region of southern Peru which it says has the potential to produce more than 200,000 t of copper a year. It also has the Taca Taca copper-gold-moly project in Salta Province in north west Argentina where recovered copper would reach a peak of approximately 275,000 t within the first ten years of operations.
Rio Tinto acquired the La Granja Project from the Government of Peru in 2006 and has since carried out an extensive drilling program that significantly expanded the declared resource and understanding of the orebody, and established partnerships with host communities, local and national governments. According to a contract signed between Rio Tinto and the Peruvian Government, the mining company undertook to deliver a feasibility study by the end of 2016. However, the Government then signed an addendum extending this for another ten years.
Previously the envisaged open pit mine involved a production of up to 500,000 t of copper per year over a 40 year mine life. Arsenic is an issue with the copper sulphide deposit, but Rio has already done a significant amount of R&D on this. Adam Burley, Rio Tinto’s Nuton venture lead, told IM last year that the core of Nuton is an elevated temperature bioleaching process that can, in the right thermochemical conditions, deliver ‘peak’ copper recovery from primary sulphides such as chalcopyrite. He added that a lot of the progress made with these technologies was tied to the development of La Granja. “Part of the resource contains high arsenic and arsenic-related mineralogy,” Burley says of La Granja. “That was the trigger really for a concerted effort to look at an alternative to a concentrate and processing route. We made quite a number of Nuton breakthroughs in our study of that deposit.”
Rio Tinto Copper Chief Executive Bold Baatar said: “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.”
He added: “This partnership underscores not only La Granja’s potential to be a significant copper producer, but Peru’s position as one of the world’s most important mining investment destinations. Developing La Granja would also further strengthen Rio Tinto’s copper portfolio following the acquisition of Turquoise Hill Resources and commencement 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.”
