Freeport halts Candelaria mine sale negotiation over Chilean tax uncertainty

31 August 2014 (Last Updated August 31st, 2014 18:30)

Freeport-McMoRan Copper & Gold has halted negotiations with Canada's Lundin Mining over the proposed sale of its Candelaria copper mine in Chile for more than $2bn, after the country made changes to its tax regime.

Freeport-McMoRan Copper & Gold has halted negotiations with Canada's Lundin Mining over the proposed sale of its Candelaria copper mine in Chile for more than $2bn, after the country made changes to its tax regime.

The company has also sought clarification regarding the country's capital gains tax, a person familiar with the matter told The Walls Street Journal.

In July this year, Chile's Senate approved a broad tax reform, which was sent to the country's lower house for approval.

"The sale of Candelaria is part of Freeport's strategy to reduce its current debt of $20.9bn, and diversify into oil and gas businesses."

Chile opposition senator Víctor Perez Varela had earlier told the news agency that: "The substantive changes that favour small and medium-sized business and entrepreneurs were a factor that marked the difference between the bad project that was presented and a reform that helps a sector of the economy that generates the most employment."

The sale of Candelaria is part of Freeport's strategy to reduce its current debt of $20.9bn, and diversify into oil and gas businesses.

Candelaria is 80%-owned by Freeport and 20% by Sumitomo. It is one of the four copper mines operated by Freeport in South America, including Cerro Verde in Peru, and El Abra and Ojos del Salado in Chile.

In 2013, the company's South American operations produced 1.33 billion pounds of copper, where Candelaria produced 168,000t of copper, reported Mining.com.

Freeport and Lundin own the Tenke Fungurume copper mine in the Democratic Republic of the Congo. The mine is 56%-owned by Freeport, 24% by Lundin and the remaining by the Congolese state mining company.

Both Freeport and Lundin had previously intended to sell their stakes in the Tenke Fungurume copper mine.

Energy