Appetite for ‘green energy metals’ drives deals

The latest deal on October 14 is South32’s acquisition of a 45% stake in Sierra Gorda, a low-grade open-pit copper mine in Chile’s Antofagasta region for an upfront cash payment of $1.6 billion, and a further amount of up to $500,000, structured as a contingent price-linked consideration and payable annually over four years as a percentage of incremental revenue above agreed copper price and production thresholds.

“We are actively reshaping our portfolio for a low carbon world and the acquisition of an interest in Sierra Gorda will increase our exposure to the commodities important to that transition,” South32’s CEO Graham Kerr said. “Copper is a critical metal in the decarbonisation of the world’s energy networks and has strong long-term market fundamentals.”

The mine is expected to produce 180,000 tonnes of copper, 5,000 tonnes of molybdenum, 54,000 oz. gold and 1.6 million oz. silver (214,000 tonnes copper-equivalent) in calendar 2021. South32 is acquiring its stake from Japan’s Sumitomo Metal Mining (31.5%) and Sumitomo Corp. (13.5%). Polish miner KGHM owns the other 55%. South32 is funding the transaction with cash on hand and an underwritten debt acquisition facility.

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