February 21, 2017 / 5:11 PM / 6 months ago

UPDATE 1-Anglo may walk away from El Soldado copper mine in Chile

(Adds details from regulator on mine plan)

By Eric Onstad and Rosalba O'Brien

LONDON/SANTIAGO, Feb 21 (Reuters) - Anglo American said on Tuesday it will walk away from its El Soldado copper mine in Chile if it cannot agree with local regulators on a permit for a redesign of the operation.

The company's initial application for the redesign was rejected due to the potential for a collapse where the project crossed former underground operations, according to a regulatory document seen by Reuters on Tuesday.

Anglo said last week it had temporarily suspended operations at the mine, which produced around 36,000 tonnes of copper in 2015, after failing to get the regulatory approval. It did not give reasons for the project's rejection.

The company is still hopeful it will secure approval in three to four weeks, but if a satisfactory permit cannot be agreed, "we won't continue going forward with the operation", Chief Executive Mark Cutifani told a presentation following the group's earnings announcement in London.

In a report dated Jan. 30 that set out why it was rejecting the permit, Chilean mining regulator Sernageomin said the project interacted with an underground mine that closed in 2010 "which generates high potential risks for uncontrolled collapse."

The company had not considered the structure or geology sufficiently, it said. But it left a window open for Anglo to redesign the project.

"The mining company can register a new project that gives greater security to people and installations, according to the terrain," it said.

Anglo has said it believes its plan was safe.

"El Soldado is geotechnically complex, but we are confident that our plan for the mine is safe, a view that has been validated by internal and external experts in this field," the company said.

El Soldado is part of the Anglo American Sur complex, in which Chile's state-run Codelco and Japan's Mitsui and Mitsubishi also hold stakes.

The mine has lost money in recent years and management has been following an aggressive savings plan against the backdrop of falling copper prices. (Reporting by Eric Onstad in London and Rosalba O'Brien in Santiago; Editing by Jason Neely and Paul Simao)

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