Rio Algom to develop copper mine in Chile

Toronto-based Rio Algom (TSE) will proceed with development of the Cerro Colorado copper mine in northern Chile after receiving approval from the Chilean Foreign Investment Committee.

Cerro Colorado will produce 40,000 tonnes of high quality copper cathode per year from an open pit starting in 1994, and is expected to have a 23-year mine life. Minable reserves are estimated to be 79 million tonnes grading 1.39% copper.

Capital costs for the project, including working capital, interest, property acquisition and exploration costs, are about US$290 million. Financing has been arranged through a commercial bank, syndicates and import loans tied to sales agreements.

Meanwhile, Rio Algom has given up trying to sell its metals distribution business after failing to receive any attractive offers.

“Economic conditions in North America and Australia have affected the level of interest of prospective purchasers,” says Colin Macaulay, president and chief executive officer.

The metal distribution business, which brought in revenues of $37.3 million in 1990, includes sourcing, warehousing, processing and marketing metal products such as stainless and speciality steels. Rio was hoping to sell the division in order to concentrate on mining and exploration.