Codelco seeks to lock in Anglo mining stake

Mon Jan 2, 2012 3:57pm EST
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By Moises Avila and Felipe Iturrieta

SANTIAGO, Jan 2 - Chile's state copper giant Codelco said on Monday it exercised a disputed option to buy a stake in Anglo American's south Chile mining assets, but is willing to consider taking a smaller stake if Anglo proposes a formula that safeguards its full value.

Anglo last year announced it had sold a 24.5 percent stake in the assets to Japan's Mitsubishi (8058.T: Quote), which Anglo said halved Codelco's potential 49 percent stake. The move surprised world No. 1 copper producer Codelco, along with investors.

Codelco, which viewed Anglo's preemptive move as a snub, said on Monday it exercised its option to buy a 49 percent stake in the south Chilean properties of Anglo American for an estimated price of around $6 billion. At current copper prices, experts say the stake is worth far more.

Anglo responded to Codelco's move by saying it was not obliged to sell any shares in the south Chile properties to Codelco. This sets the stage for a potentially lengthy legal battle.

Anglo's properties in southern Chile include the flagship expansion project Los Bronces, where Anglo has invested around $2.8 billion; the El Soldado mine; the Chagres smelter; and the Los Sulfatos and San Enrique Monolito exploration projects.

Codelco's Chairman Gerardo Jofre said he wanted Anglo to sell the state miner the 24.5 percent stake that is not in contention "now", and said it would fight for the balance.

"We are going after the 49 percent, or its equivalent value in the worst case," Jofre told a news conference. "The economic value can be captured in different ways."

"No-one should misunderstand the fact we are willing to receive a 24.5 percent (stake), or however much is not in dispute. We are going to fight for the other part by all legitimate means," he added.   Continued...