ANGLO AMERICAN has agreed to sell rival Codelco a stake in its coveted south-central Chile copper holdings, ending a bruising 10- month battle between the mining titans over Codelco’s bid to buy a bigger share.
The cash deal, which is worth more than $2.8 billion and represents a significant discount to the market price, will cut Anglo’s stake in its Anglo American Sur properties to 50.1 per cent, while giving Chilean state miner Codelco and financing partner, Japan’s Mitsui, a 29.5 per cent stake.
The agreement yesterday terminates a multibillion-dollar courtroom showdown over Anglo’s flagship Los Bronces mine, poised to become the world’s fifth-largest copper mine at its peak and previously called La Disputada, “the disputed one” in Spanish.
Codelco initially wanted to exercise an option to purchase 49 per cent of Anglo American Sur. However Anglo’s surprise sale of 24.5 per cent of the properties to Mitsubishi for a hefty $5.4 billion last November dented Codelco’s ambitions.
Anglo and Codelco executives praised yesterday’s deal, which was reached a day before an agreed deadline. Anglo copper chief John MacKenzie, in a rare joint press conference with Codelco chief executive Thomas Keller in Santiago, said the company had done well for its shareholders.
“[Anglo] would have received $4.9 billion for the 49 per cent stake rather than the equivalent of $7.19 billion agreed today, resulting in an effective $2.29 billion improvement,” Goldman Sachs said in a note to clients.
Meanwhile, Mr Keller said Codelco now held a stake in the most productive copper reserves district in the world at a highly attractive price. A previous valuation suggested a price of about $2.8 billion for the 24.5 per cent stake.
Codelco’s willingness to relinquish its original aspirations for the 49 per cent may sit poorly with public opinion and its powerful unions, however. Anglo was forced to nearly halve its share in Los Bronces mine in less than a year.
The two miners are hoping the deal leads to “joint initiatives on Los Bronces-Andina”, Anglo said.
Industry players have long speculated over potential synergies between the two mines, which geologically constitute one mega-deposit. – (Reuters)
