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23 August 2012

Anglo American and Codelco agree new partnership and settle claims in the best interests of both companies

Anglo American plc (“Anglo American”) and Corporación Nacional del Cobre de Chile (“Codelco”) today announce their agreement to form a new partnership in respect of certain of Anglo American’s copper interests in Chile, known as Anglo American Sur (“AA Sur”).

Anglo American and Codelco, with assistance from their respective partners, Mitsubishi Corporation (“Mitsubishi”) and Mitsui & Co., Ltd. (“Mitsui”) and within the conciliation proceeding provided for by the 14th Civil Court of Santiago, have settled their respective claims in relation to the AA Sur option agreement as a result of extensive discussion and the conclusion that all parties have acted in good faith and without wrongdoing in connection with the settled claims.

Anglo American retains control of AA Sur, reducing its 75.5% shareholding to 50.1%. A Codelco and Mitsui joint venture company controlled by Codelco (“the Codelco/Mitsui joint venture”) will acquire a 29.5% interest in AA Sur through the following two transactions:

  • a 24.5% shareholding in AA Sur for net cash consideration of $1.7 billion, representing a consideration of $1.8 billion, adjusted for dividends paid in relation to the shareholding since 1 January 2012 (the option exercise price for Codelco in the January 2012 option exercise window for a 24.5% interest in AA Sur, excluding shareholder loans, would have been approximately $2.5 billion). As part of this transaction, the shareholders in AA Sur have also agreed to effect the transfer from AA Sur to Codelco of certain undeveloped mining tenements to the east of Codelco’s Andina mine which are expected to offer significant synergies and value to Codelco, while being of nominal commercial value to AA Sur; and
  • a 5% shareholding in AA Sur (comprising 0.9% from Anglo American and 4.1% from Mitsubishi) for total cash consideration of $1.1 billion. The Codelco/Mitsui joint venture’s acquisition of the 4.1% shareholding is subject to clearance by competition authorities in Brazil. Pending such clearance, Anglo American has agreed to acquire from Mitsubishi a 4.1% shareholding in AA Sur for cash consideration of approximately $890 million and has agreed, upon clearance, to on sell that 4.1% shareholding in AA Sur to the Codelco/Mitsui joint venture for cash consideration of approximately $890 million. This transaction will reduce Mitsubishi’s holding in AA Sur to 20.4%. In consideration for Mitsubishi’s participation in the transaction, Anglo American will also pay a fee of $40 million to Mitsubishi.

The transactions will be settled in cash and Anglo American intends to use the proceeds for general corporate purposes.

The shareholders in AA Sur have executed a Shareholders’ Agreement, which provides a framework for the ongoing governance of AA Sur, confirms Anglo American’s ability to control the company, and provides for board representation and participation in certain decisions for the Codelco/Mitsui joint venture and for Mitsubishi.

Cynthia Carroll, Chief Executive of Anglo American, said: “Today’s commercial agreement demonstrates Anglo American’s and Codelco’s focus on our future and potential as partners in the best interests of both companies, while we have both gained significant value for our shareholders and other stakeholders, and recognise Mitsubishi’s contribution to facilitating today’s agreement. The combination of Anglo American, Codelco, Mitsubishi and Mitsui forms a compelling proposition for future investment in the Los Bronces district – one of the world’s most exciting producing and prospective copper ore bodies – for the benefit of all our respective shareholders”.

Thomas Keller, CEO of Codelco, said: “I am very pleased that an agreement has been reached that fulfils our expectations in terms of value creation for Codelco, reinforces Codelco’s standing as the main copper producer in the world and which sets the ground for an innovative partnership with Anglo American in AA Sur. We can now look forward to working together to build further on the value that both companies have gained through today’s agreement.”

Gerardo Jofré, Chairman of Codelco, said: “This is an enormously positive agreement for Chile, for Codelco and for Anglo American. Our partnership in AA Sur brings together the world’s largest copper producer with one of the world’s premier diversified mining companies. We are all committed to working collaboratively, in a spirit of goodwill, to realise the considerable potential of AA Sur for the benefit of Chilean jobs and the Chilean economy as a whole. We are particularly pleased to have reached this agreement alongside Mitsui, whose commitment to the success of this transaction has been invaluable.”

Sir John Parker, Chairman of Anglo American, said: “We warmly welcome Codelco and Mitsui alongside Mitsubishi as our partners. The new ownership structure of AA Sur provides a unique opportunity for all shareholders to create a new future. Together we will build upon our longstanding commitment to Chile as one of the country’s largest inward investors.”

Completion of the transactions is subject to the injunction being lifted by the 14th Civil Court of Santiago for which the appropriate filings are being made today. Completion of the Codelco/Mitsui joint venture’s acquisition of the 24.5% and 0.9% shareholdings in AA Sur will take place following the receipt of an order terminating the injunction, and is expected on Friday 24 August. Completion of the Codelco/Mitsui joint venture’s acquisition of a 4.1% shareholding in AA Sur is subject to clearance by competition authorities in Brazil and will therefore take place in due course.

For further information, please contact:
Anglo American  
   
Media Investors
UK UK
James Wyatt-Tilby Caroline Crampton
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 2192
   
Emily Blyth
Tel: +44 (0)20 7968 8481
   
South Africa South Africa
Pranill Ramchander Nicholas Gordon
Tel: +27 (0)11 638 2592  Tel: +27 (0)11 638 3262
   
Chile  
Marcelo Esquivel  
Tel: +56 2 230 6584  
   
Codelco  
   
Media  
Chile   
Pablo Orozco  
Tel: +56 2 2506131 / +56 9 81982582  
   
Media  
UK   
Simon Rigby, Citigate Dewe Rogerson  
Tel: +44 (0)20 7282 2847  
   
Grant Ringshaw, Citigate Dewe Rogerson  
Tel: +44 (0)20 7282 2851  
   

Notes to editors:

Anglo American is one of the world’s largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American’s portfolio of mining businesses spans bulk commodities – iron ore and manganese, metallurgical coal and thermal coal; base metals – copper and nickel; and precious metals and minerals – in which it is a global leader in both platinum and diamonds.  Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The company’s mining operations, extensive pipeline of growth projects and exploration activities span southern Africa, South America, Australia, North America, Asia and Europe.
www.angloamerican.com

Anglo American Sur (“AAS”), a subsidiary of Anglo American, holds a significant portfolio of copper assets in Chile, including the large open pit Los Bronces mine, the open pit El Soldado mine and the Chagres smelter. For the year ended 31 December 2011, AAS generated an EBITDA of $1.2 billion, had net assets of $3.9 billion and gross assets of $6.3 billion. The portfolio has extensive JORC compliant proven and probable reserves of 2.3 billion tonnes plus additional resources of 6.6 billion tonnes, together with excellent exploration upside. There are a number of projects currently under evaluation that have significant potential to enhance near term performance and deliver long term growth. In addition, exploration activities point to further potential to expand resources at existing operations. Operations, project development and the exploration programme are led by a highly experienced Anglo American management team, including John Mackenzie (CEO of Anglo American’s Copper business) and James Beams (CFO of Anglo American’s Copper business), with established relationships with local partners and agencies, supported by leading technical expertise, project development skills, and a global platform.

Codelco is the world´s largest copper producer, headquartered in Chile. In 2011 Codelco produced 1,796,000 tons of copper, representing 11% of total world copper production (including its share in El Abra mine). Codelco is also one of the top companies in molybdenum production, with 23,098 metric tons produced during 2011.  Codelco is a 100% state-owned company and it has the largest copper reserves and resources known in the world. Codelco´s sales in 2011 were US$17.51billion.
www.codelco.com

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