MELBOURNE – BHP Billiton has agreed to sell its Pinto Valley copper mine and a railroad in Arizona to Capstone Mining Corp for $650 million, the latest in a spate of asset sales by the top global miner as it tightens its belt in a weaker market.
BHP and its global mining peers have put billions of dollars worth of mines, projects and aluminium operations up for sale as they look to slash costs, cut debt and focus on their highest returning assets as commodity prices slump.
Pinto Valley takes BHP's total asset sales over the past 12 months to $5 billion.
The Australian company flagged earlier this year that it was looking to sell around 10 more assets, without naming them. Analysts had said Pinto Valley was a likely target, along with aluminium, manganese and some petroleum operations.
The deal gives Vancouver-based Capstone its third producing mine. With forecast production of 130-150 million pounds of copper in concentrate and about 10 million pounds of copper cathode a year, the mine will more than double the company's current output.
Cash costs at the mine, which restarted operating in December 2013, are estimated at $1.80 a pound, Capstone said.
"Pinto Valley represents a unique opportunity to acquire a mid-sized producing copper mine in a well-established and low-risk mining jurisdiction with a significant mineral resource," Darren Pylot, President and CEO of Capstone, said in a statement.
(Reporting by Sonali Paul; Editing by Joseph Radford)