(Bloomberg) -- Rio Tinto Group agreed to sell a majority stake in its La Granja copper project in Peru to First Quantum Minerals Ltd., as the world’s second-largest miner focuses on flagship developments in Mongolia and the US.
First Quantum will pay $105 million to acquire 55% of an asset Rio described as one of the world’s largest untapped projects and invest an initial $546 million to progress the site’s potential development, the companies said Friday in a statement.
“We share our partner’s view that the project has the potential to be a Tier 1 copper mine,” said First Quantum Chief Executive Officer Tristan Pascall, using industry terminology to refer to large, long-life and low cost projects.
Read more: Rio Tinto Digs Deep as Prize Copper Mine Finally Delivers
Copper is a key material in the clean energy transition, used in everything from electric vehicles to wind turbines. Demand is expected to as much as double over the next decade, according to S&P Global, with many analysts predicting a severe shortage.
Acquiring more potential growth in Peru will help Vancouver-based First Quantum become less dependent on its major copper asset in Panama, where a months-long tax dispute recently halted ore processing and shipments. The company already has the Haquira deposit in Apurimac, in the country’s south.
While La Granja is a sizable deposit, the orebody is complex and it’s located in Cajamara, high in the northern Peruvian Andes, where relations between isolated rural communities and the mining industry have been tense.
Rio this month had first production at its massive Oyu Tolgoi underground copper mine in Mongolia, one of the largest in the world, and is also focused on adding copper through the expansion of its Kennecott site in Utah, and the Resolution development in Arizona.
The transaction is expected to be completed by the end of the third quarter and First Quantum will become the project’s operator, according to the statement.
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