ANGLO American and Chile’s Codelco announced today they had reached a final agreement for the joint development of their mines Los Bronces and Andina.
The partners said their joint operating company would unlock 120,000 tons a year in additional copper production over 21 years, equivalent to 2.7 million tons. A memorandum of agreement to form the joint company was first announced in February.
“The outstanding work of our teams reinforces our confidence in the joint mine plan and the expected more than $5bn of additional pre-tax value for Anglo American Sur (AAS) and Codelco,” said Duncan Wanblad, CEO of Anglo American in a statement. Anglo has a 50.1% stake in AAS with the balance owned by Mitsubishi Group (20.4%) and Becrux, a Codelco/Mitsui joint venture company (29.5%).
In essence, the plan is that AAS and Codelco will be able to coordinate mining of their respective orebodies in terms of shared surface infrastructure.
Production will be shared equally. Relative to production from the partners’ mines as standalones, the joint venture will yield a 15% cost reduction with “minimal capital expenditure”. The combined production from Los Bronces and Andina in 2024 would rank in the top 10 copper mines globally and once adjusted for the incremental 120.000 tons annually is expected to rank within the top 5, Anglo said.
Permitting for the mine plan is expected in 2030.
In terms of the agreement, the parties will continue to own their mines and surface facilities and have the right to develop separate projects.
“In just eight months, we finalised the joint mining plan we announced in February,” said Máximo Pacheco, Chairman of Codelco. “We can now maximise the potential of the Andina-Los Bronces mining district without major investments and with significantly greater returns,” he added.
The joint agreement with Codelco is not the first cross border cooperation concluded by Anglo under Wanblad.
In December, Anglo announced it had completed a deal incorporating Vale’s Serpentina iron ore deposit into its Minas Rio iron ore mine in Brazil worth $157.5m. In terms of that agreement, Vale took a 15% stake in Minas Rio with an option over a further 15% shareholding.
Most consequential in this regard, however, is the proposed merger of equals between Anglo and Teck Corporation unveiled on September 9 in terms of which the parties will jointly develop their adjacent Collahuasi and Quebrada Blanca (QB) mines, also in Chile.
According to Dawid Heyl, portfolio manager at Ninety-One, cooperation between Anglo and Teck at their Collahuasi/QB mines could create a copper complex to rival even Escondida, the world’s largest copper mine owned jointly by BHP (57.5%) and Rio Tinto (30%). “Escondida is the prize copper asset in the world and I think this one [Collahuasi/QB2] could be bigger,” said Heyl.
