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Anglo American and Codelco, the Chilean copper miner, have agreed to extend their negotiations for a second time in a bid to settle the dispute over ownership of the London-listed miner’s Anglo Sur assets.
While no agreement between the companies has been reached, people familiar with the matter said the companies were making progress and the broad outline of a possible settlement was taking shape.
Various options remain but London-listed Anglo is set to retain control of its Sur subsidiary, whose assets include the Los Bronces mine, with the minority stake likely to be divided between Codelco and Japan trading houses Mitsubishi and Mitsui.
A final agreement could involve other components, such as land swaps or offtake contracts, according to those close to the talks. Codelco’s Andina mine adjoins Los Bronces, which would allow land access or other co-operation agreements to form part of a settlement.
The battle over Anglo Sur started late last year when Codelco said it intended to exercise a longstanding option to buy 49 per cent of the business, financing the roughly $6bn purchase price with funding from Mitsui.
Anglo countered, agreeing a sale of 24.5 per cent of Sur to Mitsubishi for $5.4bn, implying a valuation for Anglo Sur of about double that under the option.
After a protracted stand-off – and with a costly legal battle on the cards – the companies in May agreed to talks to explore a possible deal.
The battle between state-owned Codelco and Anglo has attracted political scrutiny in Chile.
And Codelco could face opposition from its unions, who throughout have insisted that the company settle for nothing less than the 49 per cent stake.
Juan Carlos Guajardo, director of Chilean copper think-tank Cesco, said the response of Codelco’s unions to any deal would depend on how much compensation Codelco received for relinquishing its claim.
However, he welcomed the decision to keep talking.
“At one point, a negotiated settlement looked very difficult and the damage that would cause the industry and the country would be enormous,” he said.
Drawing a line under the legal bust-up would be a boon for Cynthia Carroll, Anglo chief executive, who has faced criticism from investors and analysts for investing $2.8bn in expanding Los Bronces before resolving the looming question of Codelco’s option.