Codelco-Mitsui stall Anglo American assets sale in Chile

Codelco-Mitsui stall Anglo American assets sale in Chile

Aerial view of Codelco’s Andina (left) and Anglo American's Los Bronces (front) copper mines in Chile. (Image from archives)

Only a month after Anglo American (LON:AAL) completed the $300 million sale of its 100%-owned Mantos Blancos and Mantoverde copper mines in northern Chile, analysts are calling into question the firm’s chance to unload two other assets.

While the company’s El Soldado mine has not generated much enthusiasm among investors, local financial newspaper El Diario (in Spanish) reports that Anglo has already received at least one attractive offer for its Chagres smelter.

The potential deal success, however, will depend on how well Anglo American can negotiate off-take terms with partners Mitsui & Co., Mitsubishi Corp. and Chile’s copper giant Codelco. This as the companies not only have a stake in both assets, but also hold 29.5% of Anglo American Sur’s (AAS) flagship Los Bronces mine, poised to become the world’s No. 5 copper mine at its peak.

Under a deal reached in 2012 between the chief of Codelco at the time, Thomas Heller, and Anglo American, the joint venture formed by the Chilean powerhouse and the Japanese trading house has the right to oppose any deals concerning the coveted south-central Chile properties.

Sources quoted by El Diario say the main opposition to the Chagres sale is expected to come from Mitsui, as the potential transaction would value the smelter at a lower price than what was estimated in 2012, generating considerable loses for the firm.

The situation is especially complicated because the value of AAS assets was set by Mitsubishi, Anglo’s "ally" in a bitter dispute that saw the company lock horns with Codelco for almost a year. The legal battle was a key issue in a saga of mismanagement that finally cost CEO Cynthia Carroll her job.

Based on Codelco’s financial results for the first half of this year, the assets it co-owns with Anglo Sur are worth $22 million, which means the 29.5% stake it holds with partner Mitsui is worth roughly $6.7 million.

Meanwhile, Anglo American has decided to postpone expansion plans for its Collahuasi copper mine in Chile, jointly owned with Glencore (LON:GLEN), as copper prices are trading at six-year lows.

The companies already had planned to cut output at Collahuasi by 30,000 tonnes, alongside dozens of jobs.