The WSJ reports,"Freeport-McMoRan Copper & Gold Inc. is looking to sell its large Candelaria copper mine in Chile, an asset sale that could raise several billion dollars, according to people familiar with the matter.
The mine has attracted interest from Magris Resources Inc., a Toronto-based mining-investment vehicle headed by former Barrick Gold Corp. chief executive Aaron Regent, according to these people.
Phoenix-based Freeport, which has been diversifying into oil and gas, is under pressure to reduce its debt from its current level of $20.9 billion. In May, it announced a deal to sell its Eagle Ford Shale assets in Texas for $3.1 billion to reduce debt and raise cash to buy new operations. Some of the mining world's biggest players have been selling mines as they look to pay down debt taken on through acquisitions during the commodity-boom years.
"This might not be the best time to sell a copper asset but they promised to reduce their debt," says Charles Bradford, an analyst with Bradford Research Inc. "And Candelaria's a good property that can generate some cash, and there are people out right now with money to spend."
Freeport mines copper, gold and other metals in Peru, Chile, Indonesia, the Democratic Republic of Congo and the U.S. But it has been diversifying. In 2012, it paid $9 billion for two oil and gas companies. CEO Richard Adkerson has also said he wants to invest more within the U.S., which he says has more consistent, and in some cases, easier environmental and labor rules. It has launched major expansion projects in Arizona. Its Morenci mine in Eastern Arizona is now expected to produce almost a billion pounds of copper a year—37% of U.S. annual output—by 2016.
Candelaria—in which Freeport owns 80% and Sumitomo Corp. 20%--is Freeport's fifth biggest mine overall by number of union employees and second biggest in Chile. It is one of four mines the company owns in South America.
The company's overall copper output was 4.1 billion pounds in 2013.
The 13,400-acre Candelaria complex in northern Chile in 2013 produced 370 million pounds of copper, up from 270 million pounds a year earlier. The mine also produced 87,000 ounces of gold last year.
But it also carries some risk, making it potentially more attractive to a smaller, private owner than to institutional investors and mainstream shareholders. It is located in a desert with average rainfall of less than an inch a year. Last year, Freeport completed a $315 million desalination plant and pipeline that will supply Candelaria with water in the long term. The mine was also the object of an environmental complaint filed by a neighboring municipality. The complaint was later withdrawn".
