ANGLO American has defended its due diligence of a $50bn merger with Teck Resources after the Canadian miner sharply reduced output forecasts at its copper mines.
Vancouver-based Teck announced Wednesday that its flagship Quebrada Blanca facility in Chile would produce 170,000 to 190,000 tons of copper this year, down from previous guidance of up to 230,000 tons, with forecasts through 2028 also lowered.
The reduction marks the second downgrade at the asset this year, following an earlier revision linked to waste disposal difficulties, said the Financial Times.
Quebrada Blanca was viewed as a crucial element of last month’s merger announcement, given its proximity to Anglo’s Collahuasi mine. Industry executives and analysts have long contemplated combining the two operations, though Quebrada Blanca has suffered repeated setbacks that have pressured Teck’s share price over 12 months.
Anglo said that Teck’s outlook was “broadly consistent” with “significant due diligence” conducted before agreeing the merger, with plans remaining unchanged.
“While the specific outcome of the operational review that Teck has announced today was not known at the time, the outcome presented by Teck is broadly consistent with Anglo American’s independent due diligence and analysis,” the company said.
The forecast reductions coincide with copper prices nearing fresh peaks following fatal incidents that analysts believe will restrict global supplies of the metal, vital to sectors from technology to energy, said the Financial Times.
London benchmark copper has surged to almost $10,800 per ton following disasters including a fatal mudslide at Freeport-McMoRan’s Grasberg mine in Indonesia, where seven people died, the newspaper said.
Berenberg raised its copper forecast 12% to $10,875/t, citing “resilient demand and ongoing supply issues” whilst noting Teck’s cuts were market-expected and reflected “short-term issues”.
