US mining giant Freeport-McMoRan will sell a stake in one of its biggest copper mines to Japan's Sumitomo Metal Mining.  The US$1 Billion deal is the biggest investment in the industry in a year, and shows the companies' two divergent views of copper after the worldwide price collapse.

Sumitomo Metal Mining will finance the deal to purchase a piece of the Morenci Copper mining operation in Arizona by taking out new loans, which the company's president believes is well worth it.

"Non-ferrous metals is a growth industry," said Sumitomo Metal Mining president Yoshiaki Nakazato at a briefing in Tokyo.  "Prices will eventually come back."

Mr. Nakazato and company are betting that copper demand will rise about three percent per year on average over the next three years from the roughly 23 million tons in 2015.  The Morenci mine produces 480,000 tons per year, putting it among the top three in the world. Proven copper ore reserves are expected to last at least two decades.

All this cuts Freeport's stake in the Morenci open-pit mine in Arizona from 85 percent to 72 percent from 85 percent.  But it goes a long way to fulfill Freeport's goal of lower debt by $5 Billion to $10 Billion, a goal shared by many other top-tier producers because of rout in raw materials.  Valued at more than $56 billion in late 2010, the company is now worth $6.4 billion.  Last month, Moody's lowered its credit rating to junk status, and Standard & Poor's did the same last week.  That puts Freeport in a new club of potential acquisition targets, sitting alongside Anglo American Plc, and First Quantum Minerals Ltd. as vulnerable to being swallowed up by larger competitors.

"This transaction represents an important initial step toward our objective to accelerate debt reduction and restore our balance sheet while retaining a portfolio of high-quality assets and resources," according to Freeport Chief Executive Officer Richard C. Adkerson.