Anglo, Codelco Agree to Talks on Resolving Chile Dispute

Anglo American Plc (AAL) agreed to seek an out-of-court settlement with Chile’s state-owned copper company in a dispute over the world’s fifth-largest copper mine.

Anglo and Chile’s Codelco requested the suspension of legal proceedings at the 14th Civil Court of Santiago until June 22 while they explore a possible resolution, the London-based company said in a statement. Anglo Chief Executive Officer Cynthia Carroll welcomed the opportunity to “re-engage.”

Anglo agreed in November to sell 24.5 percent of its Sur unit to Mitsubishi Corp. (8058) for $5.39 billion in a transaction that Codelco says aims to block its option to buy 49 percent of the unit at a below-market price. Anglo shares rose the most in a month in London today, advancing 3.1 percent to 2,087.50 pence.

“Anything that avoids a two- or three-year court dispute has got to be positive,” Des Kilalea, an analyst at RBC Capital Markets said by phone from London. “The key is, just because they’re talking, we shouldn’t necessarily believe that there will be an agreement. They are very far apart.”

Sur includes Los Bronces, where Anglo completed last year a $2.8 billion expansion, and two of the world’s best undeveloped copper deposits, according to John MacKenzie, head of copper at Anglo. Codelco owns the Andina copper mine adjacent to Los Bronces in the Andean foothills near Chilean capital Santiago.

Mitsui Financing

Codelco, the world’s largest copper producer, is entitled to buy 49 percent of Sur for about $6 billion under terms of a 2002 contract and has a loan facility in place with Mitsui & Co. to finance the acquisition, according to the company’s website.

Anglo’s risk profile would be weakened if it’s forced to sell an additional stake in its key copper asset, Standard & Poor’s said in a statement today.

The state-owned company rejected an offer from Anglo last year to tear up the option contract for a $1 billion payment, Hernandez said in an April 18 interview. Further talks to reach an agreement broke down earlier this year, he said.

Anglo said it had “from the outset, been consistently in favor of discussing a commercial solution that takes into account the interests of both parties.”

A Chilean court rejected a petition by Codelco last month to freeze 49 percent of dividends paid by the division.

“We will explore once again if we can find areas of consensus with Anglo American to overcome this controversy,” Codelco Chief Executive Officer Diego Hernandez said in a separate e-mailed statement today.

To contact the reporters on this story: Carli Cooke in Johannesburg at clourens@bloomberg.net; Matt Craze in Santiago at mcraze@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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