Anglo nabs Disputada for US$1.3 billion

Vancouver – Adding some muscle to its already impressive base metal portfolio, London-based Anglo American (AAUK-Q) has purchased Exxon Mobil’s (XOM-N) Chilean copper mining subsidiary Disputada de Las Condes Limitada for US$1.3 billion in cash.

The diversified miner, owner of Chile’s Mantos Blancos mining company and a 44% stake in the Dona Ines de Collahuasi copper mine, expects to realize more than $100 million in savings by merging Disputada with its existing operations in Chile.

Exxon Mobil acquired Disputada in 1978 and has invested US$1.2 billion in its development. Disputada is expanding its Los Bronces mine, with a US$200 million investment that will increase its production by 60,000 tonnes of copper per year. The project includes a new mill for the crushing stage, and a second solvent extraction and electrowinning extraction plant. Once the project is finished, Disputada’s production (including Los Bronces and El Soldado) will rise over 300,000 tonnes of copper per year. Last year, Disputada produced 254,000 tonnes copper from the combined copper mines in central Chile. Nearby, the firm also runs the Chagres smelter.

The purchase, which also includes future contingent payments of up to an additional US$120 million in the event of higher future copper prices over the next 3 years, will be funded from Anglo’s existing resources and is subject to completion of due diligence, a definitive sale and purchase agreement. Exxon said it expected to sign a sale and purchase agreement within a month and to complete the transaction by June 30.

Exxon put Disputada on the selling block late last year. Subsequently, several firms signed confidentiality agreements to evaluate the assets. Chile’s state-owned Codelco, which claimed a keen interest in the assets, announced its withdrawal from the bidding process in early March after its offer was rejected.

“Exxon Mobil has informed us that our last offer for the acquisition of 100% of the rights of Minera Disputada Las Condes and Inmobiliaria CMD Limitada still do not fulfill its expectations,” Codelco said in a press release. “Taking this into account, Codelco has decided not to persist in acquiring these assets and withdraws from the process.”

The Chilean company would not disclose the amount of its offer, but sources close to The Northern Miner estimate it was in the range of US$1 billion.