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Is South32 eyeing another copper mine?

South32 M&A

As South32 looks to grow its portfolio, the company seems to have identified a copper mine that could be an M&A fit.

According to The Australian Financial Review, South32 has sounded out a potential acquisition of Khoemacau Copper Mining which operates its namesake copper mine in Botswana.

Khoemacau ramped up to full production in February – achieving 3.65 million tonnes per annum (Mtpa) of throughput – and has a nameplate production capacity of 60,000 tonnes per annum of copper, with silver as an added-value product.

Khoemacau has an estimated mine life of 20 years, producing copper at C1 cash costs of $US1.15 per pound. Mining is currently taking place from Zone 5 – an underground mine where three corridors are producing an average of 1.2Mtpa of ore each.

It is understood South32 has engaged RBC Capital Markets as it prepares an indicative bid for Khoemacau Copper Mining, while the AFR also believes the company could come up against opposition, including from Sandfire Resources.

Khoemacau could be seen to complement Sandfire’s Motheo copper mine, which produced first copper concentrate in late May.

South32 chief executive officer Graham Kerr recently suggested copper, zinc and nickel were the three commodities driving the company’s M&A strategy.

The major currently produces copper from its 45 per cent stake in the Sierra Gorda mine in Chile – an asset it acquired in February 2022.

The company also has a series of earn-in agreements with resource companies around the world. This includes two emerging copper exploration projects in Argentina – Chita Valley and Don Julio.

Kerr said Argentina could be a copper jurisdiction to keep an eye on in years to come.

“Argentina’s become an interesting location,” he told reporters at a Melbourne Mining Club luncheon in late April. “When we first started doing some work there, we were probably the only ones. You’ve got BHP there, you’ve got Barrick there, you’ve Glencore there – everyone’s sort of pouring money into that jurisdiction at the moment.

“If you look at where it is, it’s on the other side of the Chile mountains where basically all the copper is. So I think that’s an area that’s going to develop pretty quickly. The challenge around that jurisdiction is it tends to be on average higher levels of arsenic, which typically you blend out, or you look at new technology to remove it.”

Elsewhere, South32’s portfolio is made up of commodities such as alumina, aluminium, zinc, silver, lead, nickel and manganese.

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