CVRD, Codelco in talks

Chilean state copper enterprise Codelco and privatized Brazilian miner Companhia Vale do Rio Doce (CVRD) (RIO.PR-N) are negotiating to form a joint copper-producing venture in the Americas.

CVRD, the largest producer of iron ore in the world, and Codelco, the largest producer of copper, plan to create an equal joint venture that would be managed as an independent company. The talks will be based on a memorandum of understanding the two companies signed in Rio de Janeiro in late November.

CVRD controls five large copper deposits in the Carajas region of eastern Para state, about 550 km southwest of Belem, and plans to develop them at a cost of about US$1.2 billion.

The deposits include Salobo, with about 784 million tonnes grading 0.96% copper and 0.5 gram gold per tonne, Sossego, with 313 million tonnes at a grade of 1.02% copper and 0.3 gram gold, and three smaller deposits.

A joint venture of CVRD and Phelps Dodge (PD-N) completed a feasibility study on Sossego in May, and in October, Phelps Dodge reached a deal to sell its half-interest to CVRD for US$42.5 million. CVRD now plans to develop Sossego as a producer of 140,000 tonnes copper per year, starting in mid-2004.