Showing posts with label Codelco. Show all posts
Showing posts with label Codelco. Show all posts

Monday, December 17, 2012

Chile Codelco's Chuquicamata miners to vote on contract

Workers at Chilean state copper giant Codelco's massive Chuquicamata mine could approve the company's proposed new labour contract in a vote on Saturday, a union leader said.

"We've reached an initial agreement with the company. We hope this deal is approved to maintain labor tranquility at Chuquicamata," Jaime Graz, spokesperson for Union 1 at the mine, told Reuters on Friday.

"We're going to recommend approving the proposal," he added.

Most unionised workers at Codelco's century-old Chuquicamata deposit voted to start early contract negotiations in November.

Thomas Keller, CE of Codelco, the world's No 1 copper producer, told Reuters earlier this month that the company was hopeful it would reach a new labour deal at the mine.

The current contract at Chuquicamata, which produced about 443 000 t of copper in 2011, is set to expire on February 28.

The new, four-year contract would grant workers a 3.7% yearly wage increase and give them a bonus package of about $42 000, including about $6 330 in cheap credit.

Collective labour talks are closely watched by the mining industry after an uptick in labour action hit Chile's copper output in 2011. During the last contract negotiations in 2009/10, Chuquicamata's union staged a two-day strike.

Chuquicamata is symptomatic of Chile's aging mines. The deposit's production has been cut in half since 2007 by sharply dwindling ore grades, while costs have doubled.

The mine's transformation into an underground operation will trigger layoffs, but the union said health benefits were the key issue in negotiations.

In late November, unionised workers at the world's biggest copper mine, Chile's Escondida, voted in favour of early labour talks with the mine's controller, global miner BHP Billiton .

Edited by: Creamer Media Reporter

Saturday, November 10, 2012

Codelco Chuquicamata union agrees to early contract talks

Most unionised workers at Chilean state copper producer Codelco's massive Chuquicamata mine have voted to start early labour contract negotiations, a union source told Reuters on Friday.

The labour contract at world No 1 copper producer Codelco's Chuquicamata, which produced around 443 000 t in 2011, is set to expire on February 28.

Rapidly dwindling ore grades at century-old, emblematic Chuquicamata have prompted Codelco to transform it into an underground operation, which will lead to job losses.

Union willingness to hold earlier talks with the company suggest a new pay deal could be brokered without incident, though Chuquicamata workers have in the past staged labor action. During the former contract negotiation in 2009/10, the mine's union staged a two-day strike.

"We're expecting that there will be the beginning of an agreement within the first 15 days of December," Jaime Graz, the treasurer of Chuquicamata's No 1 union, told Reuters. "As long as we can successfully get the best for the workers, I don't see a big problem in reaching an agreement."

Copper output from the world's top producer Chile was hit in 2011 by a surge in labour action, bolstered by record prices for top export copper.

The three main unions involved in the negotiations have over 5 100 members, according to Graz. Three other smaller unions should also join talks.

Union leaders are fine-tuning the key issues for negotiation. They're aiming to clinch an over 40-month long contract compared with the former 38-month long deal, Graz said.

"We're open to talk and negotiate all points, except the health plan," he added.

Edited by: Creamer Media Reporter

Wednesday, September 5, 2012

Chile’s Codelco kicks off $3.5 billion copper mine expansion

Chilean state-own Codelco, the world's largest copper producer, began construction of the access tunnels to the new level of its El Teniente copper mine on Tuesday. The expansion is part of a $3.5 billion project that will allow the company to extend the mine life for another 50 years.

The 108-year-old operation, located about 130 kilometers southeast of the country’s capital Santiago, is the largest underground mine in the world, with 2,400 kilometers of tunnels and a copper production that reached 400,297 tonnes last year.

The new mine level, located 300 meters deeper than the current one, will enter production phase in 2017, said the company in a statement (available only in Spanish).

The miner added that the expansion project of El Teniente includes the construction of a mining town and the essential infrastructure Codelco needs to access the new mineral reserves – about 2,020 million tonnes with an average grade of 0.86% and important molybdenum content.

Thanks to this project, El Teniente will produce about 430,000 tons of copper a year, said the division general manager, Octavio Araneda.

The expansion of this copper mine is only one of Codelco’s five major structural projects announced recently. Together, they will require an investment of $20 billion in the next four years, but will allow the Chilean mining company to remain the world's #1 copper producer, with a current production close to 1.6 million tons of fine copper per year.

Friday, August 31, 2012

Codelco CEO: $100 billion mining investment in Chile by 2020 unlikely

Chile's goal of attracting $100 billion in mining investment by 2020 is unlikely to be achieved because of setbacks to several planned mining and energy projects, Thomas Keller, chief executive of state copper giant Codelco, said on Thursday.

Many analysts had already called the target unfeasible, citing Chile's ballooning energy problems, dwindling ore grades and volatile world copper prices -- all of which may cause companies to reconsider projects.

On Tuesday, Chile's top court rejected the planned $5 billion Central Castilla thermoelectric power plant, citing environmental reasons and potentially jeopardizing a string of new mines planned in the mineral-rich Atacama region.

"The portfolio of $100 billion appears very ambitious. Clearly it's a little optimistic to make it materialize within the time frame initially forecast," Codelco's CODEL.UL CEO said during a news conference.

"Indeed some projects have already been delayed and likely won't be achieved in line with what was originally programmed," he added.

Chile, once Latin America's investor darling, is also experiencing an increase in environmental and social opposition to mega projects that is gaining traction in courtrooms.

While mining helped Chile's economy grow 5.4 percent in the first half of this year, the country has the highest level of income inequality among the 34 OECD countries, according to a report by the body last year, and many Chileans feel they have been left out of the country's copper boom.

Chile's government will on Thursday send a bill to Congress intended to connect its two main energy grids to soothe criticism, soften high energy prices and bolster the country's shaky transmission system.

Lumina Copper's Caserones mine and Barrick's Pascua Lama mine are among the mines gearing up to operate in the area near where Castilla was planned.

But the rejection of Castilla may lead to delays in Codelco's small Salvador project as energy prices will be hard to stomach, Keller said in an interview with Chile's Diario Financiero on Wednesday.

Keller is overseeing the state miner's own challenging investment plans to boost copper output to more than 2 million tonnes from around 1.7 million tonnes. Chile, which produces about one-third of the world's red metal, mined 5.24 million tonnes of copper last year, down 3.2 percent from 2010 levels.

July's copper output sank 8.5 percent from June due to maintenance of conveyer belts and grinding equipment, the INE statistics agency also said on Thursday.

More than $22 billion and over 8,000 megawatts in energy investment in Chile have been suspended, according to Libertad y Desarrollo, a conservative Chilean think-tank.

Brazilian billionaire Eike Batista, whose MPX Energia SA was spearheading the Castilla project, reportedly said via Twitter that investing in Chile "was becoming impossible," according to local media, which added that the tweet was later deleted.

Source: Reuters

Sunday, August 26, 2012

Mitsui to market large share of output from Anglo Chile unit

Mitsui's direct ownership amounts to roughly 5%, but it will have the right to market the entire output share from its JV with Codelco, totaling 120,000 t/y of copper

Japanese trader Mitsui & Co said it would get the right to market a larger-than-expected share of production from Anglo American's Chilean mining unit after it backed Chile's Codelco in a battle for a stake.

Anglo and Codelco, the world's largest copper producer, reached an out-of-court deal on Thursday that ended a 10-month row over the stake in Anglo American Sur.

Codelco and Mitsui, who financed Codelco with a $1.9 billion loan, together now have 29.5 percent, while Anglo's share falls to 50.1 percent.

Mitsui's direct ownership amounts to roughly 5 percent, but it will have the right to market the Codelco-Mitsui venture's entire output share, 120,000 tonnes of copper per year, from the unit's south-central Chilean assets, which include the Los Bronces copper mine, slated to become the world's fifth biggest.

The mining industry worldwide has watched the prolonged dispute over Anglo's Chilean mines as avid Chinese demand for metals pressures miners to scramble for the few promising copper deposits left to exploit.

"There are few locations around the world where copper output is increasing, and at the same time demand from developing countries including China is very strong," said Yasushi Takahashi, chief operating officer of Mitsui's Mineral & Metal Resources Business Unit, said on Friday.

"The bottom line is we expect the tight copper market to continue," Takahashi said at a press briefing in Tokyo.

Mitsui said it would sell most of the concentrate to Japanese smelters.

Copper prices have fallen 13 percent from this year's peak of $8,765 per tonne in February, as global economic growth including in China has slowed, but miners and analysts say tight supply is likely to support the price.

Under the deal over Anglo American Sur, the business's profit will be distributed among the partners and all will now have a pro-rata share of production to market, or offtake. Mitsui will also get Codelco's share of offtake.

The Japanese company will also receive 30,000 tonnes per year of copper from other Codelco assets, which it secured in return for agreeing to provide the Chilean company with a loan to buy the Sur stake.

That brings its offtake to 150,000 tonnes per year, as much as 10 percent of Japan's annual imports of 1.4 million to 1.5 million tonnes, Mitsui officials said.

Japan's cash-rich trading houses have been taking advantage of a strong yen to scoop up commodities and minerals assets around the world.

Mitsui will pay $1.1 billion for its direct 5 percent stake in Anglo American Sur, which could rise to 9.5 percent at a later date should Codelco decide to repay part of the loan with more shares in their joint venture.

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

"If there's a chance to develop new copper mines in Chile or abroad, we would seriously consider accepting proposals to help Codelco do that," Takahashi said.

Source: Reuters

Thursday, August 23, 2012

Anglo American, Chile's Codelco settle dispute

Anglo American and copper giant Codelco ended a bruising ten-month long dispute on Thursday, with the global miner agreeing to sell its Chilean rival a stake in its coveted south-central Chile properties at a discount to the market price.

The cash deal, worth more than $2.8-billion excluding land, will see Anglo reduce its ownership of its Anglo American Sur properties to 50.1%, as the miner and fellow shareholder Mitsubishi sell a combined 29.5% to Codelco and its financing partner, Japan's Mitsui & Co.

Codelco will also get unspecified land adjacent to its flagship Andina mine. A source familiar with the deal said on Wednesday the land was worth around $400-million.

Under the agreement, reached a day before the agreed deadline, Anglo will sell 24.5% to a Codelco-controlled joint venture between the Chilean powerhouse and trading house Mitsui for $1.7-billion in cash.

The Codelco-Mitsui partnership will buy an additional 5% shareholding for another $1.1-billion, with shares made up 0.9% from Anglo and 4.1% from Mitsubishi. The 4.1% will be bought by Anglo from Mitsubishi for $890-million, and subsequently sold on.

The deal has been done at a discount to a previous valuation of the option, which suggested a price for the 24.5% at around $2.8-billion, reduced from an earlier $3-billion after copper prices fell.

Last October, Codelco said it would exercise its option to buy a 49% 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 through the sale of an indirect stake of half the shares acquired.

Weeks later, Anglo dented Codelco's ambitions and surprised the market with a pre-emptive sale of a 24.5% stake in Anglo Sur to Mitsubishi. Anglo said the $5.4 billion deal secured better value for investors.

Since then, the companies have been tussling for the properties.

Source: Reuters

Sunday, August 5, 2012

Amerigo posts Q2 loss, poised for H2 growth

Canada-based copper miner Amerigo Resources swung to a net loss of $1-million during the second quarter, with a one-time charge and “extremely difficult” mining conditions in Chile impacting on the company’s financial performance.

Amerigo, which produces copper and molybdenum from tailings from the world's largest underground copper mine, Codelco's El Teniente mine, in Chile, on Friday said quarter-on-quarter earnings were slashed by 143%, while year-on-year earnings fell by 153% for the second quarter that ended on June 30, when compared with the year-earlier period.

Revenue during the period was $40-million, compared with $38.29-million in the second quarter 2011 – an increase of 4% as a result of higher copper (15%) and molybdenum (25%) sales.

The cost of sales was $40-million, 16% higher than the year-earlier period, mainly as a result of a higher production volume, high power costs and higher costs for labour and maintenance.

Copper production was 16.6% less at 11.57-million pounds when compared with the first quarter, although on a yearly basis, the company had increased production of the red metal by 22%.

Molybdenum production was 20% higher at 228 932 lb than in the same comparable period a year earlier.

Power costs in the quarter were persistently high, totalling $12.65-million, compared with $10.68-million a year ago.

Electricity costs continued to be negatively impacted on by a drought in Chile that has beleaguered the country for more than two years. Power costs were partially mitigated from the use of the company’s power generators.

“Extremely difficult mining conditions in Colihues resulted in higher extraction costs and lower metal recoveries, both of which adversely affected financial results for the quarter,” Amerigo CEO Dr Klaus Zeitler said in a statement.

The company maintained its expected copper production for the year at 50-million pounds and its expected molybdenum production at close to one-million pounds.

Negotiations are ongoing for the rights to process old tailings from an additional tailings pond owned by El Teniente which will enable the company to significantly increase production from current levels.

The majority of the company's capital expenditure (capex) budget was spent in the first half of the year and it was expected that capex for the rest of the year would total about $4.6-million.

Zeitler added that the company’s plant expansion project was substantially completed in the quarter and that the company was now ready to increase production during the second half of the year.

"During the second half of the year we expect mining conditions to improve and believe that power costs will be lower for the rest of the year and even lower in 2013, which will be positive for Amerigo's bottom line," he said.

The company’s Toronto-listed stock traded 1.64% down on Friday at 60 Canadian cents apiece.

Source: Creamer Media Reporter

Friday, July 20, 2012

Codelco seeks access to "world-class" Ecuadorian copper/moly deposit

Chilean miner Codelco is negotiating with Ecuador for the Junin deposit which contains enough copper and molybdenum to rival the biggest mines in both Chile and Peru, an industry group says.

Codelco, the largest copper producer, is negotiating access to a "world-class" deposit in Ecuador, paving the way for the state-owned company's expansion outside of Chile, according to an industry group.

The Junin deposit in northern Ecuador contains enough copper and molybdenum to rival the biggest mines in Chile and Peru, which include Anglo American Plc (AAL) and Xstrata Plc's Collahuasi and BHP Billiton Ltd.'s Escondida, Santiago Yepez, president of Ecuador's Mining Chamber, said in an interview in Quito. Chile and Peru are the world's top copper producers.

"Junin could be one of the most significant copper deposits in South America," he said yesterday, citing earlier exploration work by Canada's Ascendant Copper Corp. and Mitsubishi Corp. The Mining Chamber represents companies exploring in Ecuador including Kinross Gold Corp. (K) and Tongling Nonferrous Metals Group (000630) Co. Codelco officials are "frequently" in Quito to meet authorities and the chamber, Yepez said.

A deal with Ecuador's state mining company Enami would give Codelco access to a large-scale copper deposit outside of Chile for the first time in its history after spending about a decade exploring in northern Brazil and Mexico. Kinross and Tongling are also in talks with Ecuador's government to start large-scale mining in the South American country for the first time.

Codelco officials declined to comment on talks with the government. Ecuador's Ministry of Non-Renewable Natural Resources didn't respond to telephone and e-mailed requests for comment.

Farmer Opposition

Codelco is focused on spending more than $20 billion to revamp its mines in Chile and may create a unit to expand overseas, Chief Executive Officer Thomas Keller said last month.

Ascendant lost the Junin concession after facing opposition from coffee growers and farmers in the nearby valley of Intag, Yepez said. Codelco faces a "tough task" in convincing locals to accept drilling at the site, he said.

More than 90 percent of Ecuador's terrain is unexplored and offers "gigantic potential" for copper and gold discoveries amid the Andean mountains that run through Chile, Peru, Ecuador and Colombia, Yepez said.

Ecuador's metals deposits, valued by the government at $220 billion, may contain more than 39 million ounces of gold reserves and more than 8 million metric tons of copper, according to the most recent data from the mining chamber.

In 2008, Ecuador annulled more than 4,000 mining concessions including Ascendant's rights to explore Junin, while President Rafael Correa rewrote the country's mining laws the following year to give the state greater control over the country's mineral resources.

Windfall Tax

Correa said yesterday he will revise a windfall tax after talks with Kinross to develop one of the world's biggest gold discoveries stalled.

"We have to make it more reasonable," Correa said. "We have the most demanding contracts in the world but we have to be very demanding because the opportunities are enormous."

The windfall tax gives the state the right to earn 70 percent of mineral profits above a pre-negotiated base price and has deterred investment, Yepez said. Codelco will be able to acquire up to 49 percent of Junin while Enami will retain a controlling 51 percent stake, he said.

Election Season

Ascendant delisted from the Toronto Stock Exchange following the annulments, while Southern Copper Corp. (SCCO) acquired the rights to Ascendant's Chaucha project in the South American country, beginning exploration this year.

Correa may wait until after February presidential elections before signing any mining accords because of opposition from environmentalists and other constituents, Yepez said.

"Without a doubt, the Ecuadorean government wants to support the mining sector and they are doing it," Yepez said. "Sadly, we are in an election season."

Large-scale mining faces resistance from local communities in Ecuador, like neighboring Peru where five people have died in demonstrations against Newmont Mining Corp.'s Minas Conga gold and copper project in Cajamarca. In March, Ecuadorean protesters forced their way into China's embassy in Quito in a failed attempt to stop the government from signing a contract with Tongling's unit, Corriente Resources Inc.

Chavez Ally

Changes in mining laws and the government's inexperience in negotiating large-scale mining contracts have deterred investors, said Xavier Andrade, a partner at Quito-based law firm Andrade Veloz Abogados. Codelco should have an easier time reaching a deal with the government than Junin's previous owners as Correa, an ally of Venezuela's President Hugo Chavez, has said he favors doing business with state-owned companies.

"The government is having a lot of trouble trying to understand how mining laws should be," Andrade, who specializes in the country's mining code, said yesterday in an interview at his offices in Quito. The country's laws give Codelco an advantage over other mining companies interested in developing the deposit, he said.

Friday, July 13, 2012

Mitsubishi to help defuse Anglo, Codelco row - sources

Japanese trading house Mitsubishi could cede part of its stake in coveted Chilean copper properties to solve a bitter row between Anglo American and Codelco, sources said, as the miners sought more time for talks.

Codelco, the world's largest copper producer, said on Thursday that the parties would seek to extend until mid August a break from litigation that was due to end on July 17, adding that a deal had not yet been clinched.

Sources familiar with the matter said one option on the table would involve Mitsubishi reducing its share in Anglo's prized Sur properties in south-central Chile, which could give room for Codelco to buy a larger stake in the assets.

"It is possible Mitsubishi could sell some of its stake," one of the sources familiar with the matter said.

A source familiar with Mitsubishi but not directly involved in the Chilean negotiations said the trading house took a long-term view and would be "open to compromise", including giving up part of its stake to ultimately boost Codelco's holding.

"They would (consider it) if this was the key to unlocking the situation," the second source said.

State-owned Codelco, which has been at odds with Anglo since October, declined to comment on possible deals to end the dispute. "If Mitsubishi was to give up part of its interest, you'd think Mitsubishi wants to profit in some way; its not a benevolent move," analyst Des Kilalea at RBC Capital said.

"The overriding thing is that a solution that is negotiated is positive providing the valuations make sense."

Anglo and Codelco have been at odds since last October over an option to buy a 49% stake in Anglo American Sur (AAS).

Codelco said in October it would exercise the option to buy the AAS stake when the option window opened in January this year and secured funding from Japan's Mitsui & Co. But weeks later, Anglo surprised the market and Codelco with the pre-emptive sale of a 24.5% stake in AAS to Mitsubishi, in a $5.4-billion deal that dented Chilean hopes, but which Anglo said secured better value for investors.

SELLING BACK

The sources said that among the possibilities being negotiated, Mitsubishi would sell down that 24.5%. Even a small stake could potentially prove a face-saving solution for Codelco, which would then have the largest share after Anglo.

"Legal matters can be undone in the same way they are done. There's no legal problem in doing a sell-back," said Inigo de la Maza, a law professor at the Universidad Diego Portales in Santiago.

"The problem is more economic. What happens with what was already paid? What happens with the other obligations?"

Several sources said new Codelco CE Thomas Keller - considered by some analysts to be more amenable to a deal than his predecessor - was in Japan last month for talks, as was Anglo.

Chilean newspaper La Tercera said Mitsubishi could cede 5% of its 24.5% stake in the asset to make room for Codelco to buy 29.5%.

But the sources told Reuters on Thursday that the two sides were still talking, while Codelco dismissed reports on the details of a deal as "journalistic speculation."

Codelco, Mitsubishi and Anglo American all declined to comment on a potential solution involving Mitsubishi.

"Discussions are confidential and ongoing," an Anglo spokesperson said.

Anglo's Los Bronces, part of the disputed unit, could at its peak be the world's fifth-biggest copper mine and stands out in a red-metal market defined by a lack of new deposits. Anglo expects its ramped-up mine to more than double annual copper output from 2010 levels in its first three years of full production, before ebbing on dwindling ore grades.

It could produce as much as 490 000 t/y. A slice of the prized properties would be a major boost for Codelco - which faces dwindling ore grades in its own deposits - as it seeks to boost its yearly output to over two-million tons by 2020.

Monetary compensation would also be welcome as Codelco builds up its massive investment plans. Anglo shares closed 2.21% lower on Thursday, outperforming a 2.78 percent fall on the broader FTSE 350 mining index.

Edited by: Reuters

Thursday, July 5, 2012

Chile’s Codelco to invest $400 million in molybdenum plant

Chile-owned copper giant Codelco plans to invest $400 million in a molybdenum processing plant to maximize its market value amid a legal dispute with global miner Anglo American.

In an interview with local newspaper La Tercera, CEO Thomas Keller (photo) said the company, the main copper producer worldwide and world's No 2 molybdenum miner, is adding value to its business.

“We're paving the way to consolidate Codelco as the second- and first-biggest producer of molybdenum in the world," Keller said.

In 2011, Codelco sold 22,800 tonnes of the metal used to harden steel and will ramp up production of molybdenum once it coverts its Chuquicamata mine to an underground operation.

“The [Chuquicamata] project will allow us to directly sell a good chunk of our molybdenum production as commercial molybdenum because what we sell currently is molybdenum concentrate,” Keller added.

Asked about Codelco's dispute with Anglo American over copper assets in southern Chile, the executive said he is committed to achieving an agreement with Anglo and that hopes a long court trial can be avoided.

Read more on the conflict between Anglo American and Codelco >> >>

Monday, June 25, 2012

Anglo and Codelco like the boy who cried wolf: dispute deadline moved to July 17

London-based Anglo American (LSE:AAL) and Chile's state-owned Codelco did not come to an agreement on Friday, as they had previously announced, regarding disputed copper assets that has had the miners engaged in a bitter legal confrontation for months. Instead they have agreed to extend the talks until July 17.

Anglo said today that both parties requested the continued suspension of their legal proceedings at the 14th Civil Court of Santiago to extend the period for exploring an agreement in relation to Anglo American Sur.

Investors are closely watching this case to see if the parties can finally achieve a deal before the new self-imposed deadline expires. If not, then they will go back to court and extend the dispute for years, damaging their reputation and likely affecting their respective business.

As a State-owned company, Codelco’s potential defeat would be a bitter political blow with uncertain ramifications.

Anglo, on the other hand, faces pressure from its shareholders as it needs to prove the recent $2.8 billion invested in the Los Bronces copper mine, one its Sur division’s operations, won’t be in vain. If Codelco wins Anglo would lose its 100% ownership as a consequence.

Since 2011, the world's largest copper producer and Anglo are fighting over contracts affecting the diversified miner’s division in the South of Chile, home for the world’s fifth largest copper mine.

In late May, the parties agreed to put their legal battle on hold until June 22 to explore the chance of reaching an agreement. A day after this announcement, Codelco CEO Diego Hernandez resigned claiming “personal reasons,” which gave room for speculations.

The clash between Anglo American and Codelco goes back to November last year, when the copper giant decided to exercise an option and Anglo American responded by selling a 24.5% stake in its southern Chilean division to Japan’s Mitsubishi Corp. for $5.39 billion. By doing this, Anglo undermined Codelco plans to exercise its option, something that the copper miner could only have done in January.

A failed attempt by Codelco to force Mitsubishi to hand over the particulars of the deal in December drove the Chilean company back to the courts by formally informing Anglo American that it was “exercising its legal option” to buy the contested 49% in Anglo Sur.

If an agreement is not possible, then Chilean courts will have to settle the conflict.

Anglo American is one of Chile’s largest foreign investors.

Saturday, June 23, 2012

Anglo, Codelco seek negotiation extension

Analysts suggest that the request to a local courtby the two companies to extend the negotiation window to July 17th suggests they two parties are close to resolving a bitter dispute

Global miner Anglo American Plc and world No. 1 copper producer Codelco have asked a local court to extend their negotiation window to July 17 from June 22, the companies said in separate statements on Friday.

The mining titans requested the extension "to allow talks to continue," suggesting they may be close to a deal to end a bitter dispute over coveted copper assets.

"Anglo American and Codelco have agreed to extend the period for exploring the possibility of negotiating an agreement in relation to Anglo American Sur," the companies said.

A source who is close to Codelco's legal team told Reuters earlier on Friday the companies requested a July 17 conciliation session. Reuters had exclusively reported on Thursday that the companies would seek more time to talk.

Investors have been watching to see if Chile's state-owned copper giant Codelco and Anglo will hash out a deal or whether they return to a courtroom for a showdown that could drag on for years.

"This means they're well on their way to a deal," said Juan Ignacio Guzman, mining professor at the Universidad Catolica.

The contract conflict between Codelco and Anglo centers on an option agreement dating to 1978.

Codelco said in October it would exercise the option to buy a 49 percent stake in Anglo American Sur (AAS) when the option window opened in January.

But weeks later, Anglo surprised everyone with the pre-emptive sale of a 24.5 percent stake in AAS to Mitsubishi Corp, in a $5.4 billion deal that dented Codelco's ambitions but which it says secured better value for investors.

Since then, the firms have been tussling for the properties, which include the promising Los Bronces mine that used to be called La Disputada, "the disputed one," in Spanish.

"Mitsubishi and Mitsui are also at the table negotiating," Guzman said. "(They) also have to give their opinion. Any deal affects them."

Codelco said in October it had secured a $6.75 billion bridging loan from Japan's Mitsui & Co to allow it to exercise its option.

Los Bronces, which could at its peak be the world's fifth-biggest copper mine, stands out in a red metal market defined by its lack of new deposits.

Anglo expects its ramped-up mine to more than double annual copper output from 2010 levels in its first three years of full production, before ebbing on dwindling ore grades. It could produce a peak of 490,000 tonnes of copper annually.

A slice of the prized properties would be a major boost for Codelco, which is battling stubbornly dwindling ore grades in its tired deposits as it seeks to boost its annual output to 2.1 million tonnes by 2020.

Source: Reuters

Monday, June 4, 2012

Metso to supply big mining crushers to Codelco in Chile

The delivery comprises the biggest mining cones crushers ever manufactured by Metso to the world's largest open pit copper mine

Metso has signed a contract with Codelco, a major Chilean mining company, to supply big cone crushers for a process improvement project in the Chuquicamata division. The contract also includes an automatic control system for crushers delivered by Metso. The complete value of the order exceeds EUR 9 million.

According to the new contract Metso will supply three biggest cone crushers ever manufactured by Metso. The operational weight of one MP1250 series cone crusher exceeds 150 tons, and the crusher can process up to 1800 tons of ore per hour in secondary position for this application.

"We are very excited to receive this order. Codelco Chuquicamata is one of the most important mining companies in Chile, and they chose Metso's cone crushers to increase capacity in their division", comments Renato Verdejo, Manager, Crushing and Screening Capital Equipment South Cone, Metso.

Metso's crusher delivery to the Codelco Chuquicamata will be completed within the last quarter of 2012. The order was included in Mining and Construction's first quarter 2012 orders received.

Three biggest mining cones crushers

The total project delivery comprises three Nordberg MP(R)1250 cone crushers. The MP(R)1250 continues the success of the MP(R) 1000 and MP(R) 800 using the same footprint as the MP(R) 1000, but delivering up to 25% increase in capacity.

With an increased power rated up to 1250 HP (932 kW), the MP(R)1250 performs more work per crushing cycle, and its power-to-production ratio exceeds that of its similarly sized competitors in the market.

Codelco is the largest mining company in Chile. Chuquicamata division operates two copper and molybdenum producing mines, named Chuquicamata and Mina Sur. By the excavation volume, Chuquicamata mine is world's largest open pit copper mine.

Metso's mining and construction professionals specialize in always bringing the right technology, processes, machinery and services to our customers in the aggregates production, construction, mining and minerals processing.

Source: http://www.marketwatch.com

Thursday, May 31, 2012

Codelco, Anglo American in talks on AAS dispute

Chilean copper producer Codelco has started start talks with London-based Anglo American (LSE: AAL) to negotiate an agreement to a dispute about the former's central Chile assets, known as Anglo American Sur (AAS), the state company said in a statement released Wednesday afternoon.

Codelco CFO Thomas Keller, who is scheduled to take over as CEO on June 1, traveled to London to initiate talks with the multinational firm's representatives.

"Negotiations are taking place today and there's a confidentiality contract, so we can't comment any more," current CEO Diego Hernández said.

Legal proceedings concerning the dispute were suspended until June 22 at the request of the companies.

Codelco filed a lawsuit against Anglo American in January to force the latter to comply with an option contract for a 49% share in AAS.

Codelco has recognized that it is open to acquiring a lower stake in AAS, if properly compensated, according to local press.

The original option was granted to state minerals company Enami when the assets, then known as Disputada de Las Condes, were privatized in 1978 and bought by Exxon (NYSE: XOM), which sold Disputada to Anglo in 2002.

Last October, Codelco announced its intention to exercise the option. However, one month later Anglo American sold a 24.5% stake in the assets to Japan's Mitsubishi for US$5.39bn, a proportionately higher value than Codelco would pay under the option terms. The move was interpreted by Codelco as an attempt to block its option.

AAS's assets include the Los Bronces and El Soldado copper mines and Chagres smelter.

Sunday, May 27, 2012

Anglo gaining ground in Codelco battle

With the tussle moving out of the courts and into the commercial arena and with Codelco CEO Diego Hernandez suddenly quitting his post in the midst of the ongoing battle, Anglo American CEO Cynthia Carroll appears to have gained significant traction in her standoff with Codelco, Chile’s State-owned copper mining company.

Codelco and the Johannesburg- and London-listed Anglo American have been at loggerheads since Hernandez attempted to exercise a decades-old 1978 option to seize nearly half of Anglo's copper assets in the South American country, at a heavily discounted price, in a forced sale.

Hernandez, who previously headed BHP Billiton in Chile, resigned his post on Thursday, effective June 1, citing personal reasons.

His place will be taken by Codelco CFO Thomas Keller, 55, who has a Master of Business Administration from the University of Chicago. He was previously executive president of the Collahuasi copper mine, which is owned by Anglo American and Xstrata.

Keller’s appointment follows hot on the heels of Anglo and Codelco halting legal proceedings to seek a commercial agreement amidst Chile Mining Minister Hernan de Solminihac saying that Codelco would retain the same strategy going forward in spite of Hernandez’s departure.

But the extent of the unfairness that Hernandez was attempting to foist on Anglo, which has proved a good corporate citizen in Chile, was exposed for all to see when Mitsubishi showed its preparedness to pay billions of dollars more for a quarter of Anglo American Sur than the then errant and now exited Hernandez was prepared to pay for half of it.

This mine nationalisation by stealth stands to short-change previously disadvantaged South Africans, whose pensions and provident funds are tied up in Anglo American, which has been operating in South Africa since 1917.

Anglo’s sale of 24.5% of Anglo American Sur SA to Mitsubishi valued 100% of Anglo’s Chilean assets at $22-billion and other analysts say the true value of Anglo’s assets in Chile could be significantly higher, given Los Bronces’ large planned growth.

To add insult to injury, the government of Chile is standing by to take another big slice in the form of capital gains tax the moment the deal goes through.

Hernandez surprised investors in October by announcing plans to exercise the option to buy 49% of the Anglo American Sur unit in Chile for the parsimonious $6-billion, after reaching a funding followed by sell-back arrangement with Mitsui of Japan.

Anglo’s shares plunged 4.7% after the announcement when Codelco breached terms by moving to take up the option prematurely.

Anglo retaliated in November when Mitsubishi agreed to buy 24.5% of Anglo American Sur for $5.39 billion.

Later, a Chilean court rejected a petition by Codelco to freeze an Anglo dividend payment and then court proceedings were suspended on May 22 for a month, to allow the two companies to reach a solution by June 22.

The copper output of the under-capitalised Codelco has been on the decline and Hernandez's swoop on Anglo American Sur was opportunistic to the point of damaging the reputation of Chile as a secure mining investment destination.

Anglo American Sur includes the newly expanded Los Bronces and El Soldado copper mines, the Chagres smelter and two recently discovered copper-rich deposits, Los Bronces Sur and Los Sufaltos.

Los Bronces borders Codelco's Andina copper mine.

Anglo American had still not commented on Hernandez’s exit at the time of going to press.

Source: Creamer Media Reporter

Thursday, May 24, 2012

Codelco confident of reaching 2012 target despite Q1 drop

The copper miner is confident it will reach its annual target of 1.708 million tonnes and put behind the 10% loss of output suffered in the first quarter from a year earlier

The world's top copper producer, Chile's Codelco, said on Wednesday its output fell 10 percent in the first quarter from a year earlier to 373,000 tonnes, but said it was on target to produce 1.708 million tonnes this year.

Codelco produced 414,000 tonnes of copper in the first quarter of 2011, but output was hit during the first three months of this year by dwindling ore grades -- which the state mining giant sees improving in the second half of the year.

The century-old, massive Chuquicamata mine's production fell sharply to 60,000 tonnes from 100,000 tonnes during the same quarter last year, though output at the promising Andina mine improved to 62,000 tonnes.

"We are confident we will reach our (annual output) target of 1.708 million tonnes," CEO Diego Hernandez told a news conference, as lower ore grades had already been factored into annual production forecasts.

Hernandez said he sees market supply and demand fundamentals remaining tight and does not see copper prices dropping much, despite volatility in global markets amid Europe's swirling crisis.

Copper fell on Wednesday in London to a 4-1/2-month low, hit hard by a frenzy of risk-averse selling tied to global growth concerns, but miners point to brisk long-term growth forecasts for Asian giants China and India and curtailed metal supply as supporting prices in the long-term.

Hernandez said Codelco would push ahead with investment projects as planned, and that copper price fluctuations and rising operational costs would not trigger delays in the miner's ambitious $22 billion portfolio of projects planned by 2020.

Codelco's cash costs in the first quarter of the year were $1.30 per pound of copper, rising from 2011's average $1.16 per pound due to higher energy costs, exchange rate fluctuations and inflation.

Miners in world No.1 copper producer Chile have been hit by soaring energy prices, labor unrest triggered by high metal prices and unusual, extreme weather in the mineral-rich Atacama, the world's driest desert.

Codelco said earlier on Wednesday its profits before tax and extraordinary items fell 38 percent during the January-March period from a year earlier to $1.445 billion, due to lower prices for copper, Chile's top export.

The miner, which produces roughly 11 percent of the world's copper, also produced 4,000 tonnes of molybdenum in the first quarter of the year, down from 6,000 tonnes in the same period of 2011.

Codelco produced a record 1.735 million tonnes of copper last year, but the firm forecasts its 2012 output will dip before rising to 2.1 million tonnes by 2020 as its ambitious expansion plans come on line.

ANGLO NEGOTIATIONS

A month-long break from bitter legal proceedings is a final opportunity for Codelco and global miner Anglo American to head off a lengthy court battle over a multibillion dollar contract dispute, Hernandez said.

The two miners agreed on Tuesday to go back to the negotiating table in a push to end a damaging and increasingly acrimonious dispute over Anglo American's operations in the country's central-south region.

Hernandez did not provide further details on the reactivation of the confidential talks over Codelco's option to buy up to 49 percent of Anglo's flagship south-central Chile properties.

SOURCE: Reuters

Tuesday, May 22, 2012

Anglo American, Codelco agree to talks on Anglo Sur dispute

Anglo American (LSE: AAL) and Chilean state copper producer Codelco have agreed to explore the possibility of negotiating an agreement in relation to the former's central Chile assets, known as Anglo American Sur (AAS).

The parties have also requested the suspension of their legal proceedings in a Santiago civil court until June 22, Codelco and Anglo said in separate statements released Tuesday.

If the negotiations are successful, an agreement will enable the parties to overcome their current legal dispute over a 49% stake that Codelco wishes to acquire in AAS.

Codelco filed a lawsuit against Anglo American in January to force the latter to comply with an option contract for the 49% share.

The original option was granted to state minerals company Enami when the assets, then known as Disputada de Las Condes, were privatized in 1978 and bought by Exxon (NYSE: XOM), which sold Disputada to Anglo in 2002.

Last October, Codelco announced its intention to exercise the option. However, one month later Anglo American sold a 24.5% stake in the assets to Japan's Mitsubishi for US$5.39bn, a proportionately higher value than Codelco would pay under the option terms. The move was interpreted by Codelco as an attempt to block its option.

The main asset is the Los Bronces mine, but AAS also comprises the smaller El Soldado mine and Chagres smelter.

Wednesday, May 16, 2012

Copper price: Codelco says strong stomachs will be needed this year

Due to its widespread use in construction, communication and transport copper is a bellwether for the global metals industry.

Reuters reports Chile's state owned copper producer Codelco CFO Thomas Keller said on Tuesday: "In general we think (copper prices) will be good this year, though subject to important fluctuations."

The news came on the same day as copper fell to a fresh 4-month low of $3.50 a pound in New York trading on mounting worries about the global macro-economic outlook.

Today's price is a more than 20% drop from historic highs hit at the end of July last year of a shade under $4.49 a pound.

2011 saw dramatic price collapses for copper. From the record high in July the metal plunged to $3.07 at the beginning of October, a 31% drop in little over two months. In September 2011 alone, the price dropped 26%, losing over $1/pound during the month.

During the US subprime mortgage crisis copper prices declined by more than two-thirds within six months – from $3.96 on June 30 2008 to $1.29 on the last trading day before Christmas of that tumultuous year.

Like many commodities copper's fortunes are driven by the Chinese consumption boom over the last ten years.

Recent price volatility is in sharp contrast to historical trading patterns for copper. During the previous decade from May 1992 to May 2002 copper traded within a 60c band.

Copper's price spikes up and down this year have caught the attention of industry observers with some saying that there are rogue traders operating in the market and that prices are being distorted by dominant players.

Tuesday, May 8, 2012

Codelco ups 5-year investment budget to US$27bn

Chile's state copper producer Codelco has revised its 2012-16 investment plan by US$8bn to US$27bn, the company said in its 2011 annual report.

Last year, Codelco had set a US$19bn figure for its investment portfolio.

The increase is mainly due to a rise in costs for its six so-called structural projects, according to local paper La Tercera.

"The differences between both figures is basically due to an almost US$5bn increase in the structural projects... the increase in mining projects' costs is a phenomenon that is affecting the entire industry," company sources were cited as saying.

The cost increase is mainly attributable to projects in the prefeasibility or feasibility stages. The Chuquicamata underground project was revised up to US$3.7bn while the Radomiro Tomic phase II sulfide project will now require an estimated US$4.7-5bn. The budget for the San Antonio oxide project also increased. "In the case of the latter two, thanks to new studies, production has also increased," Codelco said.

Codelco's biggest investment is Andina phase II which will now cost US$6.4bn. The project is in the feasibility stage and is expected to be resubmitted to the environment ministry's evaluation service around mid-year.

Of the six structural projects that Codelco is developing, only two - Ministro Hales (US$2.5bn) and the new mine level at El Teniente (US$3.1bn) - have investments approved and are in the construction phase.

The other four projects will go ahead, despite the rise in costs. "Even with the increase in costs, the projects are profitable, considering medium and long-term price projections," Codelco said.

In 2012, Codelco will invest a record US$4.3bn.

PRODUCTION

If Codelco's structural projects are not developed, output could drop to around 800,000t/y of fine copper by 2020. Codelco - the world's largest copper producer - put out 1.74Mt/y in 2011.

Ministro Hales will add 160,000t/y when it starts operating in 2013, the El Teniente new mine level will contribute 415,000t/y from 2017 and Chuquicamata underground will add 343,000t/y from 2018, according to the company's latest update.

Radomiro Tomic is forecast to produce 345,000t/y from 2016, while Andina phase II will add 306,400t/y to current production from 2020. The San Antonio project will add 60,000t/y from 2015.