Rio Tinto and First Quantum Minerals (FQM) entered into an agreement to form a joint venture that will work to unlock the development of the La Granja copper project in Peru, one of the largest undeveloped copper deposits in the world.

La Granja is a complex orebody located at high altitude in Cajamara, Northern Peru, that has the potential to be a large, long-life operation, with a published resource totaling 4.32 billion mt at 0.51% copper. 

Under the proposed transaction, FQM will acquire a 55% stake in the project for $105 million, and commit to further invest up to $546 million into the joint venture to sole fund capital and operational costs to take the project through a feasibility study and toward development. Upon completion of the sole funding commitment, all subsequent expenditures will be applied on a pro-rata basis according to the share ownership of the project.

The transaction is expected to be completed by the end of Q3 2023, subject to the satisfaction of regulatory approvals. As majority owner, FQM will then operate the La Granja project with initial work focused on completing the feasibility study.

Rio Tinto acquired the La Granja project from the government of Peru in 2006 and has since carried out an extensive drilling program that significantly expanded the declared resource and understanding of the orebody, and established partnerships with host communities, local and national governments.

“La Granja is an exciting but complex project that has the potential to be a significant new source of the copper that is needed for the energy transition,” Rio Tinto Copper CEO Bold Baatar said. “We are pleased to enter into this agreement with FQM, that will bring our combined development capabilities and deep knowledge of La Granja to progress the project.

“This partnership underscores not only La Granja’s potential to be a significant copper producer, but Peru’s position as one of the world’s most important mining investment destinations. Developing La Granja would also further strengthen Rio Tinto’s copper portfolio following the acquisition of Turquoise Hill Resources and commencement of underground mining at Oyu Tolgoi in Mongolia.”

“Rio Tinto’s work on La Granja has been extensive to date and we share our partner’s view that the project has the potential to be a Tier 1 copper mine,” FQM CEO Tristan Pascall said. “We look forward to working together to build on this foundation, leveraging FQM’s core strengths in mine design, project development and community engagement to progress La Granja to the next stage. FQM is excited about broadening our existing relationships in Peru and we are appreciative of the support provided by the government of Peru to this important partnership for its future major investment in the country.”

Rio Tinto and FQM have also entered into a memorandum of understanding for strategic cooperation globally in copper and other base metals exploration and project development, as well as for sharing information and technical know-how around best-in-class mining, processing, and decarbonization.