Anglo outmaneuvers Chile trying to get its copper assets on the cheap

Reuters reports Anglo American on Wednesday sold a 24.5% stake in its southern Chilean properties to Japan’s Mitsubishi Corp. for $5.39 billion, undermining plans by Chile’s state-owned Codelco to exercise an option to buy half of it.

Chile decided at the end of October, barely a week after Anglo American announced that the $2.8 billion they splashed on expanding their flagship Los Bronces mine will start to bear fruit before year end, to exercise the 33-year old option that has lapsed before, blindsiding Anglo. Anglo said the transaction values its Chile properties at $22 billion. Codelco was offering $6 billion for 50%.

Chile’s finance minister warned Anglo at the time that it must honour the deal that dates back to 1978. Codelco has put together $6 billion but analyst say that short changes Anglo by billions. What must have really galled Anglo is that they would have had to pay around $1 billion in taxes on the transaction.

Dow Jones explains some of the history: The option was previously held by smaller state mining company, Empresa Nacional de la Minera, or Enami, which sold it to Codelco for $175 million. Anglo acquired the Sur complex in 2002 from then-owner Exxon Mobil which had bought Sur from Enami in 1978, and the transaction included the option.