Tokyo: Sumitomo Metal Mining , Japan’s No.2 copper producer, said it and trading house Sumitomo Corp will invest $724 million in a Chilean copper project and receive an annual supply of 110,000 tonnes of cathode copper, about 9% of Japan’s total imports.
Copper producers in Japan, the world’s No.2 consumer of the metal, are looking to join mining projects to secure stable supply sources as China ramps up its purchases.
Sumitomo Metal Mining and Sumitomo, through a joint venture held 70% by Sumitomo Metal Mining and the rest by Sumitomo Corp, will acquire a 45% stake in Minera Quadra Chile and join its Sierra Gorda copper mine project, they said in a joint statement.
Minera Quadra Chile is a wholly owned unit of Canada’s Quadra FNX Mining Ltd.
The project is expected to start production in 2014, the companies said. During its 20-year mine life, it is expected to produce an annual average of 730,000 tonnes of copper concentrate, or 220,000 tonnes worth of cathode copper, as well as molybdenum.
The agreement would give Japan 50% of the annual copper production, which would amount to about 9% of the total copper concentrate it imports, the companies said.
The project will boost the ratio of copper Sumitomo Metal Mining buys from its own mines to nearly two-thirds of its total needs, or around 290,000 tonnes a year, in 2014, from 180,000 tonnes now.
The company aims to eventually increase production using copper from its own mines to 300,000 tonnes.
Sumitomo Metal Mining plans to produce 354,000 tonnes in the current year to March 2012, down 23% due to 60 days of regular maintenance at its mainstay Toyo Plant in Ehime prefecture.
The company has a domestic production capacity of 450,000 tonnes a year.