A worker is seen at Anglo American's Los Bronces copper mine in Chile. The deal will merge certain operations at Anglo American’s Los Bronces mine and Codelco’s Andina mine in the Andes mountains of central ChileAnglo American/Reuters
Anglo American and Chile’s state-run Codelco have finalized an agreement to jointly operate their neighbouring Chilean copper mines in a deal aimed at generating at least $5-billion from higher production and cost savings, they said on Tuesday.
The plan will bring together certain operations at Codelco’s Andina mine and Anglo American’s Los Bronces mine in the Andes mountains of central Chile, boosting production by 120,000 metric tons of copper a year and reducing costs by about 15 per cent per ton.
Los Bronces last year produced 172,000 tons of copper, while Andina produced 182,000 tons, for a total of about 350,000 tons.
Anglo and Codelco aim to add 2.7 million tons to output over a 21-year period. Additional pre-tax value, expected to come in at least $5-billion, will be shared equally between Codelco and Anglo’s local unit, Anglo American Sur, which also includes Japan’s Mitsubishi and a Codelco-Mitsui joint venture as partners.
Codelco Chairman Maximo Pacheco told reporters that Codelco had sought a tie-up between Andina and Los Bronces for decades.
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The agreed scheme, which follows an initial agreement from February, will enable a joint mining program that could yield new production as soon as 2030.
“Without major investments, geologists agree on the optimal way to extract the ore — no longer separately from each deposit, but by treating these two deposits as a single one,” Pacheco said after a meeting with Chilean President Gabriel Boric and Anglo CEO Duncan Wanblad.
“It represents a shift in the paradigm of how mining is done, mining that can be carried out collaboratively,” Pacheco said.
Analysts have previously noted that Anglo’s greater processing capacity at Los Bronces could be a benefit to Andina.
Codelco and Anglo will keep ownership of their respective assets even while forming a jointly owned company to oversee execution. The companies next need to appoint executives and board members, secure regulatory approvals and prepare environmental permit applications.
In recent years, both Los Bronces and Andina have faced pushback from environmentalists over potential impacts to the local water supply and a nearby glacier.
The companies said they would meet existing environmental standards.
The finalized deal comes after Anglo last week announced a proposed merger with Canada’s Teck Resources Ltd. TECK-B-T that would include Los Bronces. If completed, it would be the biggest mining deal globally in more than a decade.