Chinese state-owned nonferrous metals producer Zijin Mining said today that it has agreed to buy the Timok copper and gold mine in Serbia from US-based Freeport McMoran.
Zijin expects the acquisition to be completed before 29 February 2020, subject to the approval of the Chinese and Serbian governments and authorities.
This acquisition is part of Zijin's strategy to secure mining assets and expand globally.
Zijin will pay an initial $240mn to Freeport to acquire its stake and mining rights under Timok Copper and Gold mines. Five exploration rights at the periphery of the mine will also be part of the acquisition. Once production at the mine begins, Zijin will pay a further 0.4pc of the net smelting proceeds to Freeport, but the total amount will be capped at $150mn.
At present, the upper and lower belts of the mine belong to two development entities and the acquisition will resolve the development constraint between the two zones.
Nevsun Resources owns the upper belt of the Timok mine. The firm was acquired by Zijin on 12 March this year. Zijin also acquired a 63pc stake in Serbian copper miner and smelter RTB Bor in September last year.
If the acquisition closes, Zijin will have full ownership of the upper and lower belts of the Timok mine.
The lower belt of Timok mine is a low-sulphur porphyry gold-copper ore with simple composition and few impurities. The ore could be used for blending in concentrate feedstock to reduce harmful impurities. Due to deteriorating copper ore grade globally, levels of arsenic, lead, fluorine, cadmium and mercury level have been rising in copper concentrates.
As a result, many Chinese smelters required copper concentrates to be blended prior to smelting. Many copper concentrate cargoes that did not meet China's standard on the level of arsenic, lead, fluorine, cadmium and mercury level have also been rejected from the country.
Zijin produced 434,501t of refined copper and 183,131t of zinc last year. Output this year is expected to increase, driven by the group's overseas operations.