The Canadian metals and mining company has also announced that it will move ahead with the $4.8bn phase 2 development of the QB Copper Mine located in northern Chile.

Empresa Nacional de Mineria, Chile’s state-owned company will retain its stake of 10% in the QB Copper Mine.

SMM will hold a stake of 25% in Compañia Minera Teck Quebrada Blanca (QBSA), the holding company of the copper mine, while Sumitomo will own a 5% stake.

The board of Teck Resources has approved plans for the full construction of the QB2 project, with first production slated to begin in the second half of 2021.

As per the terms of the deal, Sumitomo will pay $800m for the acquired interest in the Chilean copper mine and $400m to cover a portion of construction costs for the QB2 project next year. Apart from that, the Japanese group will make a supplemental payment of $50m to its Canadian partner should the QB2 mill throughput meets certain conditions.

Sumitomo will also contribute an additional amount of the incremental value of the copper mine expansion if they decide to take part in the major expansion project, called QB3.

The second phase expansion of the QB Copper Mine is expected to enable the mine to produce copper and molybdenum concentrates until late 2040s. Overall, the QB2 project is anticipated to yield 316,000 tons of copper equivalent production a year for the first five full years of mine life.

The QB Copper Mine phase 2 expansion will see the construction of a 143,000 tons per day concentrator and associated facilities, which will be connected to a new port and desalination plant by 165km long concentrate and desalinated water pipelines.

The deal will help to bring down Teck Resources’ share of equity contributions for the development of the QB2 project to $693m.

Teck Resources president and CEO Don Lindsay said: “QB2 is one of the world’s premier undeveloped copper assets and this transaction further confirms the value of the project.

“This partnership significantly de-risks Teck’s investment in the project, enhances our project economics and preserves our ability to continue to return capital to shareholders and reduce bonds currently outstanding.”