Rio Tinto (ASX:RIO) is partnering with Chile’s state-owned copper giant Codelco to conduct exploration activities in the Agua de la Falda mineral deposit, located in the Atacama desert region.
The Atacama desert, situated in the northern part of Chile, is a prominent copper province housing some of the world’s largest mining companies, including BHP-controlled Escondida (in which Rio Tinto holds a minority stake).
This collaboration with Codelco comes shortly after Rio Tinto entered a $US45.6 million-agreement with Pan American Silver, securing a 57.74% stake in its Agua de la Falda (ADLF) unit. The ADLF unit encompasses the historical Jeronimo project in the Atacama region, along with several adjacent concessions that have remained unexplored for decades.
Codelco, holding the remaining 42.26% in Agua de la Falda, has shown little interest in the area, focusing instead on its existing mines in Chile. However, recent studies conducted by both Codelco and Rio suggest the potential presence of significant copper deposits, which will become the primary focus of future exploration efforts.
While the partnership with Codelco holds strategic value, analysts point out that Rio Tinto will likely bear the brunt of the work and funding, as the Chilean company is facing financial and operational constraints. Codelco’s production has been declining due to challenging mining conditions, technical issues, and accidents.
Moreover, Codelco’s copper mining business is underperforming due to the ageing mines, outdated technology, and inadequate investments in new areas. To add to its challenges, the Chilean government has tasked Codelco with overseeing the country’s vast lithium business, putting additional strain on the company when it should be concentrating on its core copper operations.