Arizona copper mine could be up for sale

October 24, 2012

The Pinto Valley copper mine in Arizona may soon be up for sale as owner BHP Billiton continues to streamline its portfolio, The Financial Times reported.

According to the report published on Oct. 23, people familiar with the matter said that BHP was working with advisers to consider a sale of Pinto Valley, after saying in February it would restart operations at the mine, which produces copper and molybdenum concentrate.

In 2009, the mine was placed on care and maintenance as a result of the financial crisis, around the same time the mining group closed its Ravensthorpe nickel project in Western Australia.

Pinto Valley has a production capacity of 60 kt/a (66,000 stpy) and could produce as much as $300m in earnings before interest, tax, depreciation and amortisation, were it running at full tilt.

However, with a limited mine life and uncertainty as to whether it will return to full production, the mine might fetch less than $1 billion, according to some analysts who spoke with The Financial Times. Pinto Valley might appeal to mid-tier base-metals companies seeking cash flows to finance other larger developments, said one industry expert.

BHP also has the early-stage copper joint venture called Resolution with Rio Tinto in Arizona.

BHP has been pruning its portfolio, considering selling smaller and lower-priority assets to focus on its core operations. The mining group earlier this year appointed advisers on a sale of aluminum assets in Brazil and an early-stage iron ore project in Guinea. The miner is also trying to sell its diamond operations.

Marius Kloppers, BHP’s chief executive, warned that there would be no return to the record commodities prices of the so-called “super-cycle” in the coming decade.

Speaking at the Brisbane Mining Club, Kloppers said that the “supply shortage” caused by China’s surging economy and voracious appetite for raw materials such as iron ore, coking coal and copper had largely been filled.

“What we are now witnessing is the rebalancing of supply and demand and a progressive recalibration of prices back to long-term sustainable pricing levels,” he added.

Klopper’s admission underlined the challenge facing the industry that is seeing its profitability compressed by falling prices, rising costs and demands from government and communities for a greater share in the industry’s successes.

Kloppers said the industry would have to refocus on controlling operating costs and improving productivity.



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