Freeport-McMoRan Inc, a US-based natural resources company, yesterday agreed to sell a 13-per cent stake in Morenci open-pit copper mine to Japan's Sumitomo Metal Mining Co for $1 billion.
The purchase will take Sumitomo's stake in Morenci to 25 per cent from 12 per cent, while Sumitomo Corp holds 3 per cent, leaving Freeport with a controlling 72 per cent.
Freeport, based in Arizona, said it expects to record a gain of about $550 million on the deal and expects to use losses to offset cash taxes on the transaction.
Freeport-McMoRan said that it will use the proceeds from the sale to reduce debt.
''This transaction represents an important initial step toward our objective to accelerate debt reduction and restore our balance sheet while retaining a portfolio of high-quality assets and resources,'' Freeport CEO, Richard Adkerson, said in a statement.
The Morenci Copper Mine, located in South Arizona, is one of the largest open-pit copper mines in the world.
The mine first opened for operation in 1872 and has since closed and reopened, and currently is the largest producer of copper in North America.
Over 170,000 tons of copper is produced every year in this open-pit mine, which first started as an underground mine.
Sumitomo, Japan's second-biggest copper producer, said that it plans to achieve an annual copper production interest of 300,000 metric tons, and with the acquisition of this additional interest, its annual production volume will increase by approximately 62,000 metric tons.