[SANTIAGO] The sale of BHP Group Plc's smallest copper mine in Chile has been called off after the would-be buyer failed to meet a financing deadline, according to the Cerro Colorado mine's union.

Union leaders were briefed by mine management in Iquique, Chile, on Wednesday that Melbourne-based EMR Capital Advisors Pty Ltd didn't secure the required capital for the US$320 million deal, union president Marcelo Franco said by telephone.

In June, BHP agreed to sell the mine for US$230 million in cash, plus US$40 million in proceeds from copper stocks and about US$50 million depending on prices of the metal. Deutsche Bank AG had said in a report last year it could fetch as much as US$800 million.

"We inform you today that the sale will not go ahead because the financing condition will not be fulfilled in the established deadline," according to an internal statement signed by Cerro Colorado General Manager Patricio Hidalgo, a copy of which was seen by Bloomberg. "This situation was within the possibilities and is not uncommon in businesses of such magnitude."

The deal was expected to close in the fourth quarter as the world's biggest mining company hones its focus on major operations. Cerro Colorado produced 77,256 metric tons in the year through June, about one sixteenth the size of BHP's Escondida mine, also in northern Chile.

Cerro Colorado has options that could potentially expand its lifespan for decades, the company has said. But its environmental license runs out in 2023 and after that new terms will have to be negotiated for water use.

EMR didn't immediately respond to requests for comment made outside of normal business hours. BHP didn't immediately provide comment.

BHP started the sale process for Cerro Colorado in March 2017. Union leaders were told the mine will remain within its Pampa Norte division, but that all options remain open. In the lead-up to the sale, the union had expressed concern over possible job cuts.

"As BHP we will keep working to maximize the value of Cerro Colorado and its options over the long term," according to the internal statement.

BLOOMBERG