Anglo American Just Won't Sell the Mines Rivals Really Want

  • El Soldado mine sale hampered by current copper market
  • Anglo's head of copper speaks in interview in Santiago

For Anglo American Plc, life would have to get a whole lot worse before it considers selling its best copper mines.

“We don’t need to sell them. Anglo is not in that position,” Hennie Faul, Anglo’s copper chief, said in an interview in Santiago, Chile on Monday. The entire industry would be in turmoil for Anglo to have to sell its prime assets, he said.

The century-old company is trying to engineer a turnaround by selling more than half its other mines and exiting the iron-ore and coal business to focus on its best assets -- producers of diamonds, platinum and copper. Anglo wants to raise $4 billion from selling mines and reduce net debt to less than $10 billion this year.

The price of copper has rebounded 10 percent from a six-year low of $4,318 a metric ton in January, sparking a turnaround in Anglo’s shares, which have jumped 73 percent this year in London. That’s helped relieve some of the urgency of enacting Anglo’s rescue plan unveiled in February by Chief Executive Officer Mark Cutifani.

While the company is selling everything from coal in Australia to niobium in Brazil, there has been speculation that it’s best two copper mines, Collahuasi and Los Bronces, are the sort of projects larger rivals such as BHP Billiton Ltd. and Rio Tinto Group would be interested in buying. Both have said they would like to add high quality copper mines.

Market Speculation

“There’s been speculation in the market, but I certainly didn’t have people falling on my doorstep to come in with testing offers,” said Faul.

Antofagasta Minerals SA, which last year bought a 50 percent stake in Barrick Gold Corp.’s Zaldivar mine in Chile for $1 billion, said there hasn’t been any other assets of a similar quality put on the market.

“What we’ve seen in other cycles is that companies tend to retain good copper
assets,” Antofagasta CEO Ivan Arriagada said in an interview Monday. “We think it’s going to difficult for that to change.”

While Anglo is keen to keep its flagship copper projects, the sales process for its lower-quality mines continues. The London-based company, which plans to eventually reduce employee numbers to 50,000 from 135,000, sold its Norte copper unit in Chile last year and is also looking to offload its El Soldado copper mine in the country.

Growth Shelved

“It’s still seen as non-core but we haven’t actually started the official sale process for it,” said Faul. “The market is probably not at the right time now to start that."

In the longer term, Faul said Anglo wants to expand both Collahuasi and Los Bronces but given the current market and the company’s stretched finances now is not the time.

“Both those mines have got further potential in years to come when prices are right and the market is right to expand,” Faul said. “Anglo is not in a position now to embark on a major capital expansion. I would think it would be reckless to do that.”

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