Global miner Anglo American
But a defiant Codelco said later on Wednesday the sale did not affect its right to buy a 49 percent stake and that it could sue Anglo over the option, setting the stage for a showdown with Anglo American, who said Codelco's potential stake was now reduced to 24.5 percent.
Anglo's sale to Mitsubishi can be reversed and suing the global miner for damages is an alternative, Codelco CEO Diego Hernandez told Reuters in Honolulu. Hernandez said he was surprised at what he saw as a risky move by Anglo American that could not only sour relations with Codelco, but also hurt the mining industry. He said he was leaving the Asia-Pacific Economic Cooperation summit in Hawaii early.
Codelco said in October it had secured a $6.75 billion bridging loan from Japan's Mitsui & Co <8031.T> to allow it to exercise its option and had cautioned Anglo American it must honour the option.
This contract is made in Chile under Chilean law, not in New York or London, Hernandez said. And in Chile, a...contract like this kind of option supposes good faith by both parties, and I think that is what Anglo American has violated.
Naturally the operation can be reversed, or you can sue for damages, and in this case we are talking about significant numbers, he added.
Experts believe global financial turbulence led Anglo to underestimate the likelihood that Codelco would exercise its option, having passed on it in 2008, market sources say.
Anglo's properties in southern Chile include the flagship expansion project Los Bronces, El Soldado mine, the Chagres smelter and Los Sulfatos and San Enrique Monolito exploration projects.
Anglo has invested around $2.8 billion to develop Los Bronces.
Anglo American has regularly reviewed its available alternatives and, following a thorough assessment, and in the interests of its shareholders, it entered into a process to explore the potential value of the AAS assets through the evaluation of a sale of a minority stake in AAS, Anglo American said in a statement.
Following this transaction, Anglo American holds a 75.5 percent interest in AAS. It said the deal with Mitsubishi <8058.T> valued Anglo American Sur at $22 billion.
Anglo said Mitsubishi paid in the form of a promissory note and the deal was unconditional and compliant with its option agreement with Codelco.
Anglo American could sell further stakes in its south Chilean properties before January, when Codelco has the right to exercise its option, the global miner's chief executive said on Wednesday.
We are free to sell any percentage of our shares in AAS at any time. We evaluated and continue to evaluate various alternatives, Chief Executive Cynthia Carroll said. Asked if the miner could sell an additional stake before January, Carroll said that was an alternative, but no decisions had been made.
Carroll said proceeds from the $5.4 billion sale would go towards funding its buyout of diamond producer De Beers and its pipeline of projects. Anglo will pay the Chilean state $1 billion in taxes as a result of the deal.
She added Anglo had been in touch with the Chilean government to inform them of the deal with Mitsubishi.
Codelco said it was ready to fight.
If this sale (to Mitsubishi) is confirmed, it does not affect Codelco's right over 49 percent of the shares of Anglo American Sur, Codelco said in a statement. Codelco will exercise all the actions that are necessary to safeguard its rights.
Chile's Larrain last month warned Anglo American not to evade Codelco's planned purchase.
(Additional reporting by Pablo Garibian in Honolulu. Writing by Simon Gardner; Editing by Matt Driskill)