“Capstone Mining Corp. (CS), the owner of copper mines in Mexico and Canada, agreed to buyBHP Billiton Ltd. (BHP)’s Pinto Valley mine and railroad in the U.S. for $650 million in cash, marking its biggest acquisition.
Vancouver-based Capstone is expected to complete the purchase of the Pinto Valley copper mine in Arizona and the related San Manuel Arizona Railroad Co. in the second half of 2013, Melbourne-based BHP said today in a statement.
The deal comes as Capstone scouts for producing copper mines in the Americas to add about 100 million pounds of copper. BHP and Rio Tinto Group are among mining companies selling assets to shore up earnings and cut costs after more than $60 billion of writedowns in the industry. The agreement takes BHP’s divestments to $5 billion over the last 12 months, according to the BHP statement today.
BHP shareholders are likely to respond well to the company disposing of smaller assets like Pinto Valley, which have been taking up “too much management time and too much peripheral capital,” said Vincent Pisani, an analyst at Shaw Stockbroking Ltd. “It’s taken some time, but I think BHP are finally getting it,” he said.
BHP suspended mining operations at Pinto Valley in Feb. 2009 and said mining began again during the last quarter of 2012. Capstone said BHP had spent $194 million on equipment and infrastructure to enable operations to resume.
