[miningmx.com] — ANGLO American said on Tuesday it was not obliged to sell any shares in Anglo American Sur (Sur) to Codelco, claiming Chile’s state-owned miner had illegitimately attempted to buy a stake prematurely.
The company issued the statement after it received a letter from Codelco on Monday in which the copper miner officially confirmed its intention to exercise an option to acquire a 49% holding in Sur.
“Anglo American.has received a letter from Codelco on January 2 2012 which confirms its attempt to purchase up to the maximum amount of the shares in (Sur) that it can acquire under the option agreement, which Codelco believes to be 49%,’ read an Anglo statement.
“The letter states that to the extent such amount is disputed, Codelco intends to purchase such lower number of shares in respect of which there is no dispute.’
Anglo American filed a legal complaint against Codelco for breach of contract on December 22, seeking the termination of the option agreement and damages.
Codelco was granted an injunction in November in which Anglo American was barred from selling additional stakes in Sur, after Anglo sold a 24.5% shareholding to Mitsubishi for $5.39bn.
Anglo American at first said Codelco was entitled to exercise an option for up to 24% of Sur, following the sale of the 24.5% interest to Mitsubishi, but that it was entitled to sell more stakes in Sur prior to the option window which started on January 1. However, Anglo now claims that Codelco played its option too early, which constituted a breach of contract, nullifying the copper miner’s right.
“The breach consists of Codelco’s illegitimate premature attempt to exercise the option and Codelco’s actions aimed at preventing Anglo American from exercising its contractual rights under the option agreement,’ read Anglo’s statement.
“In accordance with Chilean law, as a result of Codelco’s breach of the contract, it is no longer entitled to enforce the option on Anglo American and, therefore, any attempt to exercise the option is ineffective.’
On Monday, Codelco said Anglo American’s lawsuit was unfounded and that its only purpose was to try to thwart the exercise of the option.
“Codelco has a clear legal and contractual right to acquire 49% of AA Sur in accordance with the contract in force since 24 January 1978, and its modification of 13 November 2002,’ read a company statement.
“Codelco will exercise all necessary actions to defend and enforce its contractual and legal rights, which Anglo American is trying to ignore.’
The company said Anglo American has failed to provide it with the necessary information to determine the final price under the formula in the contract, but that it estimated the purchase price was almost $6bn.
CODELCO WANTS 24.5% “NOW’
Codelco’s chairman Gerardo Jofre told a news conference in Santiago on Monday he wanted Anglo to sell the state miner a 24.5% stake that was not in dispute now, and that Codelco would fight for the balance at a later stage.
“We are going after the 49%, or its equivalent value in the worst case,’ Jofre said according to Reuters. “The economic value can be captured in different ways.
“No one should misunderstand the fact we are willing to receive a 24.5% (stake), or however much is not in dispute. We are going to fight for the other part by all legitimate means.’
Sur houses the El Soldado copper mine, the Chagres smelter and the recently expanded Los Bronces mine – one of Anglo American’s four key growth projects.
When Anglo American acquired Sur in 2002 from ExxonMobil, it also acquired the option Chilean state mining company Enami had over a stake in the mine. Codelco later bought the option from Enami for $175m.
Anglo American’s JSE-listed shares were up 4.33% on Tuesday at 13:45, trading at R308.83, while its LSE-listed shares were up 3.57% at £24.64.
