London, England — 24 August 2012 – Global mining giant Anglo American and Chile’s state-owned Codelco have agreed to a deal that would see the Chilean copper producer take up a 29.5% stake in Anglo’s flagship property in the South American country for US$2.9bn, settling a commercial dispute that has been raging since November 2011.
The two firms were locked in a battle over a 49% stake in Anglo American Sur (AA Sur) – holding company of the Los Bronces copper mine – which Codelco claimed it owned under a historic option agreement in return for a net equity payment of US$4.9 billion, Miningmx reports.
The option was exercisable in January, a step Codelco indicated in October it was planning to pursue. However, Anglo showed it had other intentions when it sold a 24.5% stake in Los Bronces for US$5.39 billion to Japan’s Mitsubishi Corporation in November, claiming the transaction has halved the shareholding over which Codelco was entitled to lay a claim. The subsequent dispute was heading for the courts until the parties agreed in May to seek a negotiated settlement.
In terms of the deal announced yesterday, Anglo American would sell Codelco and JV partner Mitsui a 24.5% stake in AA Sur for US$1.8 billion. Codelco and Mitsui would buy another 5% stake “’ 4.1% from Mitsubishi and the remaining 0.9% from Anglo “’ for US$1.1 billion. Once these transactions were completed, Anglo would own a controlling 50.1% stake in AA Sur, Mitsubishi 20.4% and Codelco/Mitsui the remaining 29.5%.
Codelco would also receive two undeveloped mining tenements on the Los Bronces property to the east of its neighbouring Andina mine. According to reports from Chile, Codelco has placed a value of US$400 million on these tenements, while Anglo’s group director of strategy & business development, Peter Whitcutt, said the areas would have remained undeveloped for many years to come if they were to remain in Anglo’s hands.
“Those tenements were right on the boundary,” Whitcutt said. “It had significant value for them … and a useful bridge to reconcile.”
According to Whitcutt, Anglo has netted US$2.3 billion on the sale of the 49.9% stake over and above the US4.9 billion it would have been paid had it originally allowed Codelco to exercise the full option.
Anglo American’s shares responded positive to the announcement, closing yesterday 2.65% up at R257.50.
Source: Miningmx. For more information, click here.