[miningmx.com] — THE suspension of legal proceedings between Anglo American and Chile’s state-owned copper miner, Codelco, over a disputed stake in Anglo American Sur shouldn’t be viewed that the two parties are closer to a resolution.
The companies issued a joint statement on Tuesday, saying they “have agreed to explore the possibility of negotiating an agreement in relation to Anglo American Sur’.
The agreement to talks and subsequent suspension of the legal proceedings form part of a standard process in Chile’s court system where disputing parties are brought together and asked by a judge whether a negotiated settlement could be attained.
In the case of Anglo American and Codelco, Santiago’s 14th Civil Court halted proceedings on Tuesday for until June 22.
The two firms are locked in a battle over 49% of Anglo American Sur, which Codelco claims it is owed under a historic option contact. Based on a formula contained in the contract, it was entitled to acquire the stake for $6.75bn during January. Anglo American, however, pre-emptively sold 24.5% of the shares to Japan’s Mitsubishi for $5.39bn in November.
The Sur business includes the Los Bronces mine in central Chile, now one of the world’s largest copper mines after Anglo completed a $2.7bn investment at the site late last year.
Should the parties fail to come to an agreement, a legal process, with recourse to appeal and supreme courts, could take up until the end of 2014.
Spokesmen for both Anglo American and Codelco declined to comment when asked about the respective parties’ desired outcomes for negotiations, saying the process was subject to a confidentiality agreement.
“It can be safely interpreted that if both parties are interested in talks that it won’t be a case of neither side being willing to move,’ a person close to the process told Miningmx.
RBC Capital Markets analyst Des Kilalea told Miningmx, however, that the agreement to talks shouldn’t be viewed as a capitulation by either of the parties and that it would be difficult to guess what both Anglo and Codelco would be willing to sacrifice for attaining a speedy resolution.
He said a settlement might include agreements over future cooperation and synergies at neighbouring properties where it would be in both producers’ interest.
Anglo American’s shares closed up 2.49% on Tuesday during a day where the Resources Index moved up 1.8%.
In a research report written by Kilalea on May 18, he said concerns about “legal action over Anglo American Sur appear to have already been priced into the share’.
