SANTIAGO (Reuters) - World no. 1 copper producer Codelco’s incoming Chief Executive Thomas Keller is seeking a deal with Anglo American Plc over a festering, multibillion-dollar contract dispute, the firm’s chairman, Gerardo Jofre, said on Wednesday.
State copper giant Codelco CODEL.UL sources said earlier on Wednesday that Keller is out of the country, and local media have reported he is in London to hold talks with global miner Anglo (AAL.L).
“We’ve agreed with Anglo American to attempt a negotiation process to see if it’s possible to reach an agreement that would be beneficial for Codelco and beneficial for Chile,” Jofre told reporters after the state miner released its 2011 sustainability report. “We’re going to attempt reaching that agreement, and Thomas Keller is precisely on that mission.”
The talks will likely take place in various locations, Jofre added.
The two sides are locked in a bitter battle over Codelco’s long-standing option to buy a minority stake in the coveted Anglo American Sur (AAS) properties, including the flagship Los Bronces mine, but have taken a break from legal proceedings to try to reach a deal.
Current CFO Keller, who is set to take the helm of the miner on Friday after CEO Diego Hernandez resigned over differences with the board, has however signaled that the firm’s stance has not changed, and that Codelco will resume litigation if there is no deal.
Daily newspaper El Mercurio said Keller traveled to London on Monday with a small group of advisers in a bid to defuse the spat. La Tercera said he traveled on Tuesday, while Diario Financiero said talks were due to be held this week, but in New York.
The spat between Codelco and Anglo centers on an option agreement dating back to 1978. Codelco said in October it planned to exercise the option to buy a 49 percent stake in AAS, when the option window opened this January.
Just weeks later, however, Anglo surprised markets with the pre-emptive sale of a 24.5 percent stake in AAS to Mitsubishi Corp (8058.T), with a $5.4 billion deal that dented Codelco’s ambitions but which it says secured better value for investors.
Keller, seen as Hernandez’ right-hand man, said in a newspaper interview on Sunday that Codelco’s objective “continues to be to reach an agreement which is acceptable for Codelco and has to do with (Anglo) recognizing that we have the right to 49 percent” of Anglo’s central-southern Chilean assets.
Industry experts have long floated the option of a deal in which Codelco buys 24.5 percent of the properties and accepts compensation for the other 24.5 percent it is vying for.
Those properties include the expansion project Los Bronces - where Anglo has invested around $2.8 billion - and the El Soldado mine, the Chagres smelter and the Los Sulfatos and San Enrique Monolito exploration projects.
Codelco is battling dwindling ore grades, extreme weather and labor unrest as it seeks to boost output at its aging mines.
The Los Bronces deposit is adjacent to Codelco’s Andina mine, and would be a major boost to the state miner’s production.
Writing by Simon Gardner and Alexandra Ulmer; editing by M.D. Golan