Chile Forum

rjulio wrote:international companies love to play that game as they end up being from nowhere. Is not the center of the conversation, but is part of it ..in the same sense that with the US oil spill was part of the public conversation that BP is a UK based company.
In the codelco case what aglomarican did was unethical then is no good PR for britsh doing biz in chile. .. As mac is good PR for americans. as a chinise woud say it give you face.

The money that controll the moster is UK and american (hence who profit from it), the people that do the thinking too. They might have spent many year is south africa , but the DNA is british and i dont think is right to say is a S.A. company.

...top shareholders are increasingly 'unhappy'
...shareholders will demand changes at the top

LONDON (Reuters) - Global miner Anglo American's CEO Cynthia Carroll is under pressure to resolve a row with Chile's state copper giant Codelco swiftly or shareholders will demand changes at the top, the Financial Times reported on Monday.

Anglo shocked Codelco and investors in November when it sold a 24.5 percent stake in its southern Chilean copper properties to Mitsubishi, undermining an option Codelco had to buy a 49 percent stake.

The dispute over the coveted assets threatens to plunge the sides into a protracted legal battle.

The FT cited people familiar with the situation as saying that top shareholders are increasingly 'unhappy' over the uncertainty of the situation in Chile and have been pushing for a quick resolution in recent weeks.

Anglo American officials acknowledge the concern of some investors, but say the company is defending shareholder value by fighting Codelco's attempt to take over a large stake in a prized asset, the newspaper said.

Reuters could not immediately reach Anglo American for comment.

Chile's Codelco exercises Anglo American option

SANTIAGO — Chilean state mining firm Codelco said Monday it was exercising its option to buy a 49 percent stake in a copper mining venture held by Anglo American in the latest twist of a long legal battle.

Less than two weeks after the London-based firm filed a breach of contract suit against Codelco, the Chilean group -- the world's top copper producer -- said it had filed documents with market regulators to exercise the purchase option based on a 1978 contract between the two firms.

It said the British-South African Anglo American group refused to provide enough information for a final price, and that consequently it set the price at about $6 billion for the unit known as Anglo American Sur.

Codelco, which announced plans for the purchase in October, has said it would finance it under a deal with Japanese trading house Mitsui.

The legal dispute heated up when Anglo American announced it had sold a 24.5 percent stake in its Chilean copper activities to Japan's Mitsubishi Corporation for $5.39 billion.

Codelco swiftly filed suit in a bid to guarantee its right to purchase a full 49 percent share of Anglo American Sur (AAS), after the sale to Mitsubishi presumably reduced the stake available.

Anglo American countered on December 22 with a breach of contract suit, saying Codelco had prematurely sought to use its option and prevented the British-based firm from exercising its contractual right to sell to Mitsubishi.

On Monday, Anglo American reiterated in a statement that "it was under no obligation to sell any of AAS shares to Codelco."

"In line with Chilean legislation and since Codelco did not honor the contract, Codelco does not have the right to exercise its purchase option with respect to Anglo American Sur and therefore any claim to exercise this option is null and void," the statement said.

Anglo American again stressed that it was "open to working with Codelco to find a trade deal in the interest of shareholders of the two companies."

But analysts cited by Chilean media said that given the lack of agreement, a protracted legal battle could be expected.

"On average, five years for this type of cases," said Antonio Gaspar, a professor of commercial law at Diego Portales University in Santiago.

According to the 1978 contract, Codelco has the option every three years to buy up to 49 percent of AAS -- and the Chilean mining giant in October announced plans to do that in January 2012.

The deal would give Codelco control of the operations which include the copper deposits known as Los Broncos and El Soldado, as well as the Chagres smelting facility and exploration projects in Chile.

The unit, which last year produced about 260,000 tons of copper, would be integrated in Codelco's Andina division, and boost the output for the company which produces about 11 percent of the world's copper.

Anglo American is among the world's largest mining companies, listed on the London and Johannesburg stock exchanges.

Chile’s Codelco formally exercises option to buy 49% of Anglo Sur

But Anglo American alleges breach of contract and refuses to sell any AAS shares.

Codelco, Chile’s state-owned mining company, formally announced Monday its intention to exercise its option to purchase 49 percent of Anglo American Sur (AAS).

Codelco is seeking immediate ownership of what the company calls the “undisputed 24.5 percent”of AAS and expects to purchase the other 24.5 percent if it prevails in the courts to void the sale made to Mitsuibishi last last year. “Codelco is expressing its willingness to acquire the number of shares for which there is no controversy,” read documents Codelco delivered to AAS on Monday.

For its part, Anglo American, the U.K.-based owner of AAS, alleged that Codelco violated the contract between the two companies and thus is not entitled to any shares of Anglo’s Chilean holdings.

Codelco owns an option to buy a 49 percent stake in AAS every three years in January. They first announced their intention to exercise the option in October with funding from Mitsui & Co., who was set to receive 24.5 percent of AAS after the January purchase was completed.

Shortly after the announcement, however, Anglo American attempted to block Codelco’s purchase through a 24.5 percent sale to the Japanese company Mitsubishi Corp. The deal would supposedly have allowed Codelco to purchase a smaller portion of AAS, but denied the Chilean company the right to buy 49 percent.

A Chilean court granted an injunction against Anglo American preventing the company from selling further shares of AAS while the court reviewed challenges. Anglo American appealed this injunction, but it was upheld at the end of December.

Codelco offered just under US$3 billion -- half of what the original contract’s price for the full 49 percent -- for the 24.5 percent share Codelco wants to purchase immediately.

Codelco sought to use figures from Anglo American’s contract with Mitsubishi to establish the value of the 24.5 percent purchase, but Codelco alleges that Anglo American is keeping these figures under wraps to prevent Codelco from calculating the exact value of the shares.

Codelco president Gerardo Jofré told La Tercera, “We have all our legal case developed to protect our option, which is in the interest of all Chileans.”

Anglo American maintains that they do not have to sell the full 49 percent or the so-called “undisputed 24.5 percent” to Codelco, contending that Codelco violated the original contract by attempting to exercise the option before the stipulated period.

The British company is citing a writ they filed in late December that seeks not only void the contract with Codelco, but also petitions for damages for Codelco’s actions to prevent further sales of AAS to other companies.

“As Codelco breached the contract,” Anglo American said in a statement, “they have no right to exercise the option with respect to AAS, and any purported exercise of the option will have no effect whatsoever.”

Jofré estimated that the legal battle could last anywhere from three to five years.

Chile Codelco, Anglo secret talks failed-report

SANTIAGO, Feb 14 (Reuters) - Two months of secretive
talks between Chile's state copper giant Codelco and miner Anglo
American failed to resolve a stake option dispute, so a legal
battle is for now the only way forward, Codelco's CEO told a
local paper's Tuesday edition.
The mining titans have been embroiled in a bitter spat after
Anglo pre-emptively sold 24.5 percent of its
southern-central Chilean properties from under world top copper
producer Codelco.
That stymied Codelco's bid to exercise an option to buy up a
49 percent stake in the proprieties, setting the stage for an
acrimonious legal battle.
"We were talking with Anglo until Jan. 31. I can't reveal
what we discussed, due to a confidentiality contract (for
talks), which lasted for two months and expired," CEO Diego
Hernandez told daily La Tercera's Tuesday edition.
"(The talks) haven't been renewed and that demonstrates that
positions are sufficiently divergent to mean the legal route is
today the only one."

Anglo argues it was entitled to sell a share in the assets
to Japan's Mitsubishi before Codelco's window to
exercise the option in January, while the state miner says Anglo
violated the Chilean legal principle of good faith by selling
the stake.
Anglo has refused to hand over any part of its flagship Sur
properties to Codelco, which argues it has now exercised its
option.
A local judge could request a process of conciliation in
late March to push the sides towards an out-of-court agreement,
Hernandez said, adding the process was a formality.
Both Anglo and Codelco have sued each other for violating
the contract, in a legal battle that could drag on for up to
five years.

Anglo faces Chilean test as investors vent frustration

LONDON, Aug 20 (Reuters) - Anglo American, wrestling institutional investors frustrated with a battered mining sector, faces a major test this week in the shape of a deal to end a bruising, 10 month-long row with Chilean copper giant Codelco.

Sources familiar with the matter have said an agreement is expected in days, with Anglo preparing to sell Codelco a 24.5 percent stake in its coveted Anglo American Sur properties in Chile - which include the Los Bronces copper mine, potentially one of the world's largest - ending their legal battle.

Depending on price and the depth of the conciliatory discount offered, a deal could offer breathing space for Anglo's bosses, under pressure over low returns, trouble with its Brazil iron ore project and in South African platinum - where violent clashes over the past week have added to the woes of an industry squeezed between feeble prices and sky-high costs.

An imperfect Chile deal, though, could revive criticism of the miner's diplomatic abilities and its decision to invest $2.8 billion in Los Bronces before securing full ownership.

"If we see a situation where they resolve with Codelco, and they have still got a better price than they would have got through the (original) option, you would say Anglo has won something," analyst Des Kilalea at RBC Capital Markets said.

For Anglo, a perceived victory in the battle over Chilean copper is key, as fund managers, facing criticism from their own investors, begin to lose patience with the sector.

After years of investing as miners ploughed cash into growth, investors find returns are now hampered by a worsening economy.

Anglo, led by Chief Executive Cynthia Carroll, has been at the sharp end of criticism, not least because of a return on equity which fell in the first half of the year to the worst level since the 1930s, according to Citi analysts.

"Frustration is the best word for shareholder feelings on Anglo," said one of the company's top 15 investors, who requested anonymity.

"Like other shareholders, we are looking to open a dialogue with the chairman and senior independent director to explore whether the company's strategy is on the right lines."

Others said they were fretting over Anglo's capital allocation. The company, set to see free cash flow rise as investment eases, has spent some $7 billion in deals over the past 12 months, including two in the past month.

"While we are not gunning for Cynthia's head, we do have serious concerns about Anglo," another top 15 investor said.

"Reliance on South Africa is a definite concern, and their attempt to diversify with their major project in Brazil - Minas Rio - has showed far from perfect execution."

Minas Rio, like several other large projects in Brazil, has been beset by delays, cost overruns and hitches over permits.

"Investors in general are biased against mining equities and with Anglo there are a lot of problems people can point to," analyst Chris LaFemina at Jefferies said.

Solving Chile would tick at least one problem off the list.

CHILEAN SOLUTION

Anglo and the world's top copper producer have been at loggerheads since last October, when Codelco said it would exercise its option to buy a 49 percent stake in AAS in January.

Just weeks later, Anglo surprised markets with the pre-emptive sale of a 24.5 percent stake in AAS to Mitsubishi with a $5.4 billion deal - almost double the value of the same stake under the original option terms. That dented Codelco's ambitions but, Anglo said, it secured better value for its own investors.

Many Anglo investors welcomed what they said was an active defence of shareholders' interests, while others fretted over an aggressive stance that irked the host country and was partly borne of the company's failure to understand Codelco's intentions.

Codelco, for its part, said Anglo had violated the Chilean legal principle of "good faith" by selling pre-emptively. Both Anglo and Codelco sued each other for violation of contract.

An agreement this week is set to see Anglo retaining a 51 percent majority in AAS, Mitsubishi yielding a small percentage - roughly five percent according to two sources familiar with the matter - to Mitsui, which had agreed to finance Codelco.

Codelco would then get the remaining 24.5 percent at a "compromise" discount to the option value of around $2.8 billion - below an earlier $3 billion value due to weaker copper prices. It is also set to get land, the sources said.

"In monetary terms, this isn't going to be a loss compared with exclusively selling to Codelco, it will be a profit," Gustavo Lagos, a professor at Universidad Catolica's Mining Center in Santiago. "But in terms of image, I don't know."

Codelco declined to comment. Anglo said the two sides were still negotiating and declined to comment further.

Anglo Said to Be Readying Announcement of Chile Copper Agreement
bloomberg---Aug 23

Anglo American Plc (AAL) will announce as soon as today an agreement to end a 10-month dispute with Chile’s Codelco over the world’s fifth-largest copper mine, said a person with knowledge of the negotiations.

<snip>

Anglo American, Chile's Codelco settle copper dispute

(Reuters) - Anglo American ended a bruising 10-month legal battle with rival Codelco on Thursday by reaching an eleventh-hour deal to sell a stake in its coveted Chilean properties at a discounted sum of $2.8 billion.

The cash deal will cut Anglo's stake in its Anglo American Sur holdings to 50.1 percent while giving Chile's Codelco and its financing partner, Japan's Mitsui & Co (8031.T), a 29.5 percent stake - well below what Codelco originally sought.

The agreement resolves a multibillion-dollar courtroom showdown that cast a cloud over Anglo's flagship Los Bronces mine, poised to become the world's No. 5 copper mine at its peak. Anglo (AAL.L) has invested $2.8 billion in the mine, previously called La Disputada, "the disputed one" in Spanish.

Codelco CODEL.UL initially wanted to exercise an option to purchase 49 percent of Anglo American Sur. But Anglo's stunning sale of 24.5 percent of the properties to Mitsubishi (8058.T) for a hefty $5.4 billion last November thwarted Codelco's plans.

"Codelco gets significant value from an option contract that seemed lost for many years," said Juan Carlos Guajardo, head of mining think tank CESCO in Santiago. "The most important thing for Anglo is that it has closed in a fairly reasonable manner a situation that could have generated significant problems. It's a good deal for all parties."

The prolonged drama has been watched by the mining industry worldwide, as avid Chinese demand for metals pressures miners to scramble for the last few promising copper deposits left to exploit. The deal was reached a day before an agreed deadline.

Copper prices are broadly unchanged since October but have plunged about 12 percent since a peak of $8,765 per tonne in February. Three-month copper on the London Metal Exchange hit a one-month high on Thursday.

Anglo and Codelco executives both praised Thursday's deal.

Anglo copper chief John MacKenzie, in a rare joint press conference with Codelco Chief Executive Thomas Keller in Santiago, said the company had done well for its shareholders.

Anglo would have received $4.9 billion for the 49 percent stake rather than the equivalent of $7.19 billion agreed under the deal, indicating a $2.29 billion improvement, Goldman Sachs said in a note to clients.

Anglo's shares shot up to close 1.65 percent stronger on Thursday, outpacing a 0.82 percent rise in mining stocks .FTNMX1770.

Meanwhile, Keller said Codelco ended up with a stake in the most productive copper reserves district in the world at a highly attractive price. Codelco will pay $1.7 billion in cash for 24.5 percent, which it said marks a $775 million discount from the price suggested by its decade-old option.

However, Codelco's powerful union federation slammed the company for buying less than 49 percent. And Anglo was forced to nearly halve its share in Los Bronces mine in less than a year.

Mitsubishi will end up with a 20.4 percent stake in Anglo American Sur, also known as Sur.

"I think it's a good deal. In mining terms, Mitsubishi wins," said Gustavo Lagos, a professor at Universidad Catolica's Mining Center in Santiago. "Codelco wins quite a bit too ... but obviously it's a loss on the political front because it didn't get everything it wanted."

The two miners hope the deal leads to joint initiatives between Los Bronces and Codelco's promising Andina mine, Anglo said. Industry players have long speculated over potential synergies between the two, which geologically constitute one mega deposit.

FINE PRINT

Anglo Sur's profits will be distributed among the partners and all will now have pro-rata offtake. Anglo previously did all sales and marketing.

Both Codelco and Mitsubishi will have a seat on Sur's board.

Codelco will gain around 115,000 tonnes of copper annually during the first five years, which represents around 7 percent of its 2011 output, Keller told reporters.

Keller, Codelco's former CFO and the architect of the state firm's financial operation to buy a stake of Sur, took the helm of the company after industry veteran Diego Hernandez stepped down in May due to differences with the board.

Codelco will also get the undeveloped properties of Los Leones and Profundo Este adjacent to its flagship Andina mine, which it values at around $400 million.

"One has to be cautious about grand imaginative schemes but (Los Bronces and Andina) are two big properties which have a high degree of contiguity and there are things which, even from the infrastructural side, we could be looking at doing jointly," said Peter Whitcutt, Anglo's director for strategy and business development, who led negotiations.

Mitsui extended a $1.863 billion loan to Codelco for the purchase of the 24.5 percent stake in Anglo American Sur. Anglo said it intended to use income from the sales for "general corporate purposes."

Mitsui, in the context of its partnership with Codelco, will buy a 5 percent shareholding for another $1.1 billion, with shares made up of 0.9 percent from Anglo and 4.1 percent from Mitsubishi. The 4.1 percent will be bought by Anglo from Mitsubishi for $890 million and then sold to the partnership.

"It's clear Mitsubishi and Mitsui are betting heavily on Chile," said Guajardo. "Mitsui is a conglomerate that is going to strengthen its position in the country ... It's gaining a privileged relationship with Chile."

Codelco and Mitsui could explore further mining opportunities together in Chile or internationally, Codelco said in a statement to Chile's regulator on Thursday.

Last October, Codelco said it would exercise its option to buy a 49 percent stake in the Anglo Sur mining complex when the option window opened in January 2012.

It secured a $6.75 billion bridge loan from Mitsui to exercise its option, with the right, but not the obligation, to pay off part of the loan via the sale of an indirect stake of half the shares acquired.

Weeks later, Anglo surprised the market with a pre-emptive sale of a 24.5-percent stake in Anglo Sur to Mitsubishi. Anglo said the $5.4 billion deal secured better value for investors.

Since then, the companies had been tussling over the properties, which also include the El Soldado mine, the Chagres smelter and Los Sulfatos and San Enrique Monolito exploration projects.

Chile, the world's leading producer of copper, will reap more than $1.3 billion in taxes from the sale of stakes in Anglo American Sur, including Mitsubishi's purchase in November, Codelco said. Chile also avoids prolonged and potentially damaging court wrangling.

"In the country's interest, one seeks the very best," said Andres Chadwick, the government's spokesman. "But you can't always achieve it, so a good settlement is much better than a long legal battle."

greg~judy wrote:

...top shareholders are increasingly 'unhappy'
...shareholders will demand changes at the top

yo, Cynthia...!
got any "Plan B" for another CEO-ship somewhere...?
could be just about time to start looking - suerte...!

Cynthia Carroll exits as Anglo American CEO

The surprise resignation Friday of Cynthia Carroll, the Alcan-trained CEO of global mining group Anglo American PLC, comes as a blow to female corporate advancement.

Ms. Carroll, 55, was one of only the four women CEOs among FTSE-100 companies. She was the first woman to take the top job at Anglo when she joined the company in 2007, as well as the first non-South African and the first non-insider. Founded in Johannesburg in 1917 by Sir Ernest Oppenheimer, Anglo had always picked its bosses from its own ranks.

Her departure, however, does not come as a blow to shareholder advancement. Anglo shares rose more almost 3 per cent Friday morning on the news that the search has begun for a new CEO. Ms. Carroll will not leave the company until her replacement is named, likely some time in the first half of 2013.

Ms. Carroll, an American who graduated from Skidmore College with a geology degree, worked for Alcan in Montreal from 1989 until she joined Anglo in March, 2007. Her last job at Alcan was head of its primary metals group, one of aluminium maker's top jobs.

Her honeymoon at Anglo was exceedingly short. A year after she joined, the financial crisis hit, followed by a global slowdown and recessions in some of Anglo's biggest markets, including Europe and the United States. More recently, Anglo found itself in a legal battle with Codelco, Chile’s state-owned miner, and got swept up in the wildcat mining strikes in South Africa that turned violent, curtailed production and damaged the country’s financial stability. Anglo-controlled Anglo Platinum, the world biggest platinum producer, dismissed 12,000 illegally striking workers earlier this month, after they refused to return to work.

Under Ms. Carroll, Anglo has been a market underperformer. All mining companies got clobbered in the financial crisis and all recovered rather well. But Anglo’s recovery was slower than most and the company’s shares have deteriorated badly since the start 2011. In the last five years, the shares have lost more than 40 per cent. Since Ms. Carroll became CEO Anglo’s market value has fallen by about £12-billion.

Investors are taking an increasingly dim view of Anglo’s outsized exposure to South Africa, where economic and social turmoil are dominating the news. S&P last week revised its outlook on Anglo to negative because of its big exposure to South Africa. About half of Anglo’s EBITDA – earnings before interest, taxation, depreciation and amortization – come from its hefty South African coal, iron ore and platinum operations.

There is no obvious candidate for the Anglo job, though Mick Davis, the CEO of rival Xstrata, has already been mentioned as a candidate and already dismissed as one by Anglo's chairman, John Parker. “It would not be unreasonable for me to suggest that we couldn’t afford him,” he said, according to the Financial Times.

Mr. Davis, who is South African, is about to become the CEO of the merged Xstrata-Glencore group and has promised to leave after six months to make way for Glencore boss Ivan Glasenberg. In 2009, Xstrata tried to buy Anglo but was rebuffed by Ms. Carroll.

As one, Xstrata and Glencore will no doubt be tempted to make a run at Anglo. But that is unlikely to happen soon, given the rigours of putting Xstrata, a mining company, and Glencore, a trading company, together.

When Ms. Carroll leaves Anglo, the FTSE-100 companies will be left with only three female CEOs. They are Marjorie Scardino of Pearson, publisher of the Financial Times; Burberry’s Angela Ahrendts and Imperial Tobacco’s Alison Cooper. Ms. Scardino also announced her resignation this month, meaning only two female CEOs will remain.