Anglo, Codelco Sign $5 Billion Deal to Boost Chile Copper Output

The Andina and Los Bronces copper mines sit in the Andes Mountains in an aerial photograph taken near Santiago, Chile, on Friday, July 5, 2019. Chile has one of the world's largest reserves of fresh water outside the north and south poles, but the abundant glaciers that are the source of the precious commodity are melting fast. Photo by Tomas Munita /Bloomberg

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(Bloomberg) — Anglo American Plc and Chile’s state copper company Codelco agreed to definitive terms on jointly developing their adjacent mines near Santiago in a bid to boost production without major investments.

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Building on an initial accord signed in February, Anglo and Codelco have secured approval by both sets of boards and are scheduled to participate in a signing ceremony Tuesday with Chile’s President Gabriel Boric. 

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By joining forces at the Los Bronces and Andina mines, the owners hope to squeeze out an additional 120,000 metric tons a year — and at least $5 billion in value to be shared equally, Anglo said in a statement. The arrangement won’t require substantial investments given it will use existing processing capacity, and will still allow both sides to develop standalone projects, including underground. 

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Miners around the world are forging partnerships to contain costs and lift output as ore quality deteriorates and new projects get pricier to develop, at a time when global demand for the wiring metal is increasing due to the energy transition and building of more data centers to power AI. Last week, Anglo and Teck Resources Ltd. laid out plans to integrate two other neighboring mines in Chile, as part of their planned corporate merger.

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“Copper is a vital resource for the global energy transition and is at the forefront of our growth ambitions,” Anglo Chief Executive Officer Duncan Wanblad said Tuesday in a statement. “Together we are unlocking the full value potential of these neighboring assets.”

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The two adjacency deals are improving the longer term prospects for Chile after the top-producing nation saw output fall to the lowest in two decades as companies battle to revitalize aging operations. 

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Together, they would add almost 300,000 tons to the country’s total — the equivalent of a major new mine. Beyond that, BHP and Lundin Mining Corp. have a large project straddling the Argentine border and both BHP and Rio Tinto Group have promising exploration ventures with Codelco.

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