Mining and exploration company Rio Tinto has signed a joint venture agreement with Codelco, the world's largest copper producer. The newly created subsidiary SCM Los Andes will jointly contribute mineral rights in Chile to the joint venture, which will be managed by Rio Tinto.
It is the first JV Rio Tinto has agreed to with the state-owned Codelco.
The JV will be exploring the Exploradora prospect in northern Chile. Rio Tinto has the option to earn a 55% stake in the prospect via an exploration investment of US$20mn. It also has to potential to increase ownership to 60%.
Rio Tinto is also the subject of a potential takeover bid from BHP Biliton. BHP has just released its production figures for commodities as of the end of 2007. Across seven commodities, the company achieved record or equal record production levels. It achieved record shipments in its iron ore, manganese and metallurgical coal operations. Newly commission petroleum projects also have contributed to record performances.
BHP's original take-over proposal was rejected in November 2007. However, it is thought that the company may imminently launch another formal bid.
BHP’s bid follows Rio Tinto’s take over of the Canadian mining firm Alcan in the second half of 2007. It marks a continuation of the trend for mergers and acquisitions and the need for acquisition financing.
Despite being state-owed, Codelco is seen as a highly commercial entity and has been a recent visitor to the syndications market raising a US$400mn seven-year facility via mandated lead arranger BBVA last September 2007 (Click here to read previous coverage on Codelco, see GTR November/December 2007)l.
Last Updated January 25, 2008
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