Anglo gains Disputada for US$1.3 billion

Vancouver — Adding some muscle to its already-impressive base metals portfolio, London-based Anglo American (AAUK-Q) has agreed to buy Exxon Mobil‘s (XOM-N) Chilean copper mining subsidiary for US$1.3 billion in cash.

The diversified miner, owner of Chile’s Mantos Blancos mining company and a 44% stake in the Dona Ines de Collahuasi copper mine, expects to realize more than $100 million in savings by merging the subsidiary, Disputada de las Condes, with its existing operations in the country.

Exxon Mobil acquired Disputada in 1978 and invested US$1.2 billion in its development. Disputada is expanding its Los Bronces mine, with a US$200-million investment designed to boost production by 60,000 tonnes copper per year. The project includes a new mill for the crushing stage, and a second solvent extraction-electrowinning plant. Once the project is finished, Disputada’s annual production (including Los Bronces and another mine, El Soldado) will exceed 300,000 tonnes copper. Last year, Disputada produced 254,000 tonnes copper from the combined copper mines in central Chile. Nearby, the firm also runs the Chagres smelter.

The purchase, which also includes future contingent payments of up to an additional US$120 million in the event of higher future copper prices over the next three years, will be funded from Anglo’s existing resources. Exxon says it expects to sign a sale and purchase agreement within a month and to complete the transaction by June 30.

Exxon put Disputada on the block late last year. Subsequently, several firms signed confidentiality agreements to evaluate the assets. Chilean state-owned Corporacion Nacional del Cobre de Chile (Codelco), which claimed a keen interest in the assets, withdrew from the bidding process in early March, after its offer was rejected.

In a press release, Codelco states: “Exxon Mobil has informed us that our last offer for the acquisition of 100% of the rights of Minera Disputada Las Condes and Inmobiliaria CMD Limitada still does not fulfil its expectations. Taking this into account, Codelco has decided not to persist in acquiring these assets and withdraws from the process.”