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Chile’s Codelco likely to buy Anglo’s unwanted copper assets — report

Chile’s Codelco likely to buy Anglo’s unwanted copper assets — report

Mantoverde mine, one of Anglo’s copper assets Codelco may buy.

Chile-owned Codelco, the world’s top copper producer, is said to be mulling the acquisition of Anglo American’s (LON:AAL) mines in the country, as the London-based giant goes through a wide ranging review of its portfolio aimed at trimming the less-profitable parts.

Anglo, which is expected to begin unloading at least three of its Chilean copper mines and a smelter valued at $1 billion by mid-year, is likely to appoint Goldman Sachs Group Inc. and Morgan Stanley, the company’s joint brokers, for the sale.

And while the whole package of Anglo’s assets up for grabs is unclear, sources told local paper La Tercera (in Spanish) that the company would first sell its Mantos Blancos and Mantoverde mines, as well as its 50.1% stakes in El Soldado mine, and the Chagres smelter.

Anglo plans to keep its larger copper operations, Los Bronces and Collahuasi.

The fact that Codelco recently created a special smelters business division, an industry source told the paper, is a clear sign the state company wants to boost its smelting business. In this context, he added that Chagres is a natural and fitting option for Codelco to grow the new unit.

However, a company’s spokeswoman told the creation of such division aims to help Codelco reduce costs by $1 billion this year, while increasing fine copper output by 35,000 tons, as stated in a January press release. She added drawing further conclusions from it (i.e. the acquisition of assets), seemed a bit forced and that Codelco’s executives wouldn’t comment on the matter.

Among the firms that have expressed early interest are QKR Corp. and Magris Resources Inc. The first is a London-based investment group set up by Lloyd Pengilly, a former J.P. Morgan Chase & Co banker. Magris is a Toronto-based firm run by Aaron Regent, the former CEO of Barrick Gold Corp.

Anglos’ chief Mark Cutifani, who began a review of operations from Australia to Brazil after joining Anglo in April last year, has repeatedly stated he plans to increase the company’s return on capital to at least 15% by 2016. And to achieve this goal he is open to dispose those businesses pulling the average down, including four platinum mines and some coal assets in South Africa, as well as coal interests in Australia.