Anglo American and Codelco Settle Dispute over AAS


Under terms of a recently crafted agreement, Anglo American’s stake in Anglo American Sur is reduced from 75.5% to
50.1%. A joint venture company controlled by Codelco will hold a 29.5% interest in AAS, which owns the Los Bronces
mine, shown here. Mitsubishi will hold the remaining 20.4%. (Photo courtesy of Anglo American)
Anglo American and Codelco announced an agreement August 23, 2012, ending their dispute over ownership interests in Anglo subsidiary Anglo American Sur (AAS). The dispute began during the sec-ond half of 2011, when Codelco said it would exercise an option to acquire a 49% interest in AAS, and Anglo American undermined Codelco’s plan by selling a 24.5% interest in AAS to Mitsubishi. Mitsui was a factor in the dis-pute because it had agreed to finance Codelco’s purchase of its targeted 49% AAS interest.

Under the new agreement, Anglo American retains control of AAS, but its stake is reduced from 75.5% to 50.1%. A Codelco-Mitsui joint venture company con-trolled by Codelco will acquire a 29.5% interest in AAS through two transactions.

First, a 24.5% shareholding will be acquired for net cash consideration of $1.7 billion, representing a total consid-eration of $1.8 billion adjusted for divi-dends paid in relation to the sharehold-ing since January 1, 2012. As part of this transaction, AAS will transfer to Codelco certain undeveloped mining tenements to the east of Codelco’s Andina mine that are expected to offer significant synergies and value to Codelco, while being of nominal commercial value to AAS.

Second, the Codelco-Mitsui joint ven-ture will acquire an additional 5% share-holding in AAS, of which 0.9% will be from Anglo American and 4.1% from Mitsubishi, for a total cash consideration of $1.1 billion. The acquisition of the 4.1% shareholding from Mitsubishi is subject to clearance by competition authorities in Brazil. Pending such clear-ance, Anglo American has agreed to acquire from Mitsubishi a 4.1% share-holding in AAS for cash consideration of approximately $890 million and, upon clearance, to sell that 4.1% shareholding on to the Codelco-Mitsui joint venture for cash consideration of approximately $890 million. This transaction will reduce Mitsubishi’s holding in AAS to 20.4%. In consideration for Mitsubishi's participation in the transaction, Anglo American will also pay a fee of $40 mil-lion to Mitsubishi.

All of the transactions will be settled in cash. Anglo American intends to use the proceeds it receives from the trans-actions for general corporate purposes.

To support the new ownership struc-ture, the shareholders in AAS have exe-cuted an agreement that provides a framework for the ongoing governance of AAS, confirms Anglo American’s ability to control the company, and provides for board representation and participation in certain decisions by the Codelco-Mitsui joint venture and by Mitsubishi.

Cynthia Carroll, chief executive of Anglo American, said, “The combination of Anglo American, Codelco, Mitsubishi and Mitsui forms a compelling proposi-tion for future investment in the Los Bronces district—one of the world’s most exciting producing and prospective cop-per orebodies—for the benefit of all our respective shareholders.”

A project to double copper production at Los Bronces from 221,000 mt/y to 442,000 mt/y produced its first copper in November 2011. Ramp-up to full pro-duction was planned to take 12 months, during which time plant throughput was scheduled to increase from 61,000 to 148,000 mt/d of ore.

As featured in Womp 2012 Vol 09 - www.womp-int.com