Anglo shareholders supportive in Chile row

Cape Town - Anglo American [JSE:AGL] shareholders are “very supportive” of the company in its legal battle against copper producer Codelco in Chile over its assets in the country’s south, Chief Executive Cynthia Carroll said on Tuesday.

Anglo American surprised markets with the pre-emptive sale of a 24.5% stake in its southern Chilean properties in November to Mitsubishi, just weeks after world No.1 copper producer Codelco announced it planned to exercise a long-standing option to buy a 49% stake.
 
The two sides have since been embroiled in a legal spat that some analysts and industry investors fear could hurt the miner’s operations in the country and prove a damaging distraction for Anglo’s management at a time when the miner could become a target, particularly for a combined Glencore-Xstrata.

“We are very confident about our legal position. We have acted within our rights and we are in no doubt about that,” Cynthia Carroll said in a telephone interview. “We are supported by our shareholders. They understand it is not going to be easy, but we are there for the long haul.”

Anglo American’s director of strategy and business development Peter Whitcutt said the miner expected Codelco would engage in “sensible conversations” and failing that expected to pursue the matter in court. Anglo has argued Codelco has invalidated its option by attempting to exercise it pre-emptively.

Carroll declined to comment on the impact of the planned $90bn takeover of rival miner Xstrata by commodities trader Glencore, a tie-up to create a deal-driven powerhouse which analysts say could have Anglo in its sights.

Xstrata made a failed bid in 2009 for Anglo, which has a market value of just under $61bn similar to its rival.
 
The timing of the long-expected move by Glencore has been seen by some in the industry as a call on mining valuations, close to their post-crisis lows and, for some producers, close to their lowest levels for a decade.
 
Carroll said Anglo, focused on growth projects including the Minas Rio iron ore operation in Brazil, would be sticking to its plan of developing its own assets.
 
“Is there more and more interest in acquisitions? No question about it,” she told Reuters. “Are prices continuing to rise with respect to value of those assets? I think they are and that was demonstrated in the acquisition on the part of Mitsubishi of (a stake in) our assets in Chile.”

She said the long-term outlook for the industry was positive despite short-term volatility. Costs, however, remain a concern even in more uncertain markets, after biting into miners’ profits in the first half of 2011.
 Carroll said Anglo saw “considerable” cost pressures in all its jurisdictions.