Chief of Codelco quits amid legal battle with Anglo
In what it seems to be the first casualty of the heated conflict between diversified miner Anglo American (LON:ALL) and its Chilean adversary Codelco, the world’s largest copper producer announced its CEO Diego Hernandez resigned late Thursday and will be replaced by chief financial officer, Thomas Keller.
Codelco, engaged in a dispute with Anglo American Plc over contracts affecting Anglo’s division in the South of Chile, home for the world’s fifth-largest copper mine, Los Bronces, said in a press release Hernandez resignation was not linked to the conflict between the two miners.
“Hernandez tendered his resignation, effective June 1, for ‘personal reasons’,” reads the company’s statement.
However, Hernandez decision came only a day after Anglo and Codelco announced they were putting the legal battle on hold to explore the possibility of negotiating an agreement, which gave room for speculations.
Chile’s Mining Minister, Hernan de Solminihac, emphasized in an interview with El Mercurio, that Hernandez's departure had no connection to the court case with Anglo. The same newspaper reports that it was actually linked to ongoing differences with Codelco's board, according to unnamed company sources.
The clash between Anglo American and Codelco goes back to November last year, when the copper giant decided to exercise an option and Anglo American responded by selling a 24.5% stake in its southern Chilean division to Japan’s Mitsubishi Corp. for $5.39 billion. By doing this, Anglo undermined plans by Codelco to exercise its option, something that copper miner would only have been able to do in January.
A failed attempt by Codelco to force Mitsubishi to hand over the particulars of the deal in December drove the Chilean company back to the courts by formally informing Anglo American that it was “exercising its legal option” to buy the contested 49% in Anglo Sur.
Last April, Codelco filed a petition to freeze 49% of the dividends paid by the Sur Division of the London-based miner, which was rejected.
If an agreement is not possible, then Chilean courts will have to settle the conflict, British ambassador to Chile, Jon Benjamin, said. He added that England has constantly stated that it is not its intention to make a political issue out of this unfortunate situation.
"We have been also clear on stating that, despite the current controversy between both companies, Chile remains an attractive country to do businesses and invest," Benjamin said.
Anglo American is one of Chile’s largest foreign investors.