Rio Tinto (ASX, LON: RIO) and First Quantum Minerals (TSX: FM) have formed a joint venture that will focus on moving to development the La Granja copper project in Peru, which is described by the new partners as one of the world’s largest undeveloped deposits of the metal.
After paying $105 million to Rio Tinto, First Quantum now owns a 55% stake in the project and has become its operator. The Canadian miner has committed to further invest up to $546 million into La Granja, part of which will be used to complete a feasibility study over the next two to three years.
The remaining balance of the initial funding will be allocated to construction, provided that the partners decided to move forward with the project.
La Granja is a complex undertaking as it is located at an altitude of between 2,000 and 2,800 metres in the province of Cajamara, northern Peru.
Previously published reserve totals set the indicated and inferred mineral resource at 4.32 billion tonnes at 0.51% copper, and show potential for substantial expansion.
“La Granja has the potential to be a large, long-life operation and supply the copper that will be needed as the world transitions to the greener economy,” Tristan Pascall, chief executive of First Quantum, said in a statement.
“Developing La Granja would provide a significant new supply of copper and further strengthen Rio Tinto’s portfolio of materials needed for the energy transition,” said Bold Baatar, Rio Tinto’s copper boss.
Baatar added that developing La Granja would provide a significant new supply of copper and further strengthen the company’s portfolio of materials needed for the energy transition.
The world’s second largest miner has been systematically adding copper assets to its portfolio and to the global supply of the metal. Following the acquisition of Turquoise Hill Resources, the company began underground mining at the vast Oyu Tolgoi in Mongolia.
Rio Tinto acquired the La Granja Project from Peru’s government in 2006 and carried out an extensive drilling program that significantly expanded the declared resource and understanding of the orebody. The miner has also established partnerships with host communities and local and national governments.