A consortium of Chinese and South African entities has agreed to purchase the 74.5% interest in South African copper producer Palabora Mining currently held by major miners Rio Tinto and Anglo American.

The transaction in which Rio Tinto will receive USD 373 million for its 57.7% stake in the company values the Palabora enterprise at roughly USD 612 million. Anglo American will receive USD 103 million for its 16.8% stake.

Palabora is South Africa's only domestic mine-to-refinery source for refined copper, typically yielding some 80,000 tonnes of refined copper annually to supply what the company terms most of South Africa's copper needs. During the first nine months of 2012 however, the mine complex produced only 32,100 tonnes after a guide rope failure in the mine's production shaft limited Q3 output to just 4,700 tonnes.

Rio Tinto and Anglo American had signaled their intention to divest their Palabora stakes back in 2011 with the former citing the operation's limited growth capacity. Anglo American had flagged Palabora as a non core operation as a result of its small scale relative to the miner's core global assets. The transaction is the latest in a spate of asset rationalization and cost cutting initiatives by major miners like Rio Tinto and BHP Billiton in response to diminished global commodity demand.

Three Chinese enterprises two of which are government owned will together account for 80% of the consortium's combined interest, while South Africa's state owned Industrial Development Corporation will hold 20% of the acquired interest. China is the world's largest copper consumer accounting for 40% of total global demand in 2011. In a statement, the consortium hailed the transaction as a sign of confidence in the investment potential of the country and Africa as a whole.