China Minmetals walks from Equinox; Chinalco signs copper JV with Rio Tinto

As China Minmetals turns its back on Equinox Minerals (EQN-T, EQN-A) saying Barrick Gold‘s (ABX-T, ABX-N) $7.3 billion offer for the copper producer is above its “most optimistic assessment of value,” another Chinese state-owned company has teamed up with Rio Tinto (RIO-N, RIO-L) to explore for copper in northern Chile.

China Yunnan Copper Australia, an Australian-listed affiliate of Aluminum Corp. of China, or Chinalco, has the option to farm into Rio Tinto’s Palmani and Caramasa copper porphyry projects. (Chinalco owns 9% of Rio Tinto and is its largest shareholder.)

The Palmani porphyry copper and molybdenum prospect is 60 km northeast of Arica and 5 km west of the Palaeocene-aged La Mancha porphyry copper system that Rio Tinto drilled in 1997 and 1998. Palmani lies within the same belt of rocks that host the Cerro Colorado porphyry copper deposit and the Toquepala porphyry copper deposit in southern Peru, China Yunnan Copper Australia says.

The Caramasa porphyry copper and molybdenum prospect is about 80 km north of BHP Billiton‘s (BHP-N) Cerro Colorado mine.

“These targets represent potential large Palaeocene age porphyry copper, molybdenum and gold deposits similar to the Tier 1 porphyries of southern Peru,” the company said in a press release.

Under the agreement, China Yunnan Copper can earn a 40% interest in each project if it spends a minimum of US$18 million over five years on the two projects (US$10 million for Palmani and US$8 million for Caramasa).

China Yunnan Copper Australia was set up to explore and develop minerals in Australia and overseas. Its cornerstone investor, with 21.2% ownership, is Yunnan Copper Industry Group Co., (YCI), one of China’s largest copper producers. YCI produced 286,000 tonnes of copper cathode last year, earning revenues of US$5 billion. Chinalco owns 51% of YCI.

In December Chinalco and Rio Tinto signed a memorandum of understanding to explore for mineral deposits in China. Under the terms of the agreement, Chinalco will hold 51% of the joint venture and Rio Tinto the remaining 49%.

Rio Tinto is not the only major mining company courting China.

BHP Billiton announced today that it is sponsoring a new chair of Australian studies at Beijing University. Under the arrangement BHP will provide A$650,000 a year for atleast the next three years, with the potential to expand to five years, the company said in a press release.

“China is a key market for BHP Billiton and as business with China continues to grow, we are pleased to develop closer relations across a range of areas,” BHP’s chief executive, Marius Kloppers, said in a prepared statement.