SANTIAGO, Jan 2 - Chile state copper giant Codelco on Monday said it had exercised a $6 billion option to buy mining assets in southern Chile, but global miner Anglo American defied the move, setting the stage for a lengthy legal battle.
Anglo responded to Codelco's announcement by saying it was not obliged to sell any of its shares in the southern Chile properties to Codelco, the world's No. 1 copper miner. It said Codelco had sent it a letter earlier in the day expressing its willingness to buy a smaller stake than 49 percent.
Anglo last year surprised world No. 1 copper producer Codelco, along with investors, by announcing it had sold a 24.5 percent stake in the assets to Japan's Mitsubishi <8058.T>. Anglo said the move effectively reduced Codelco's potential stake by half.
Codelco viewed Anglo's preemptive move as a snub, and said on Monday it exercised its option to buy a 49 percent stake in the south Chilean properties of Anglo American for a price of around $6 billion.
Anglo American had previously argued Codelco only had a right to buy a 24.5 percent stake after the sale of a similar-sized stake to Japan's Mitsubishi <8058.T>.
However, in December Anglo then filed a writ against Codelco accusing it of breach of contract and seeking to avoid the option altogether.
The legal status of the disputed assets was not immediately clear following the latest salvos, but a protracted legal battle looks increasingly likely.
Codelco's Chief Executive, Diego Hernandez, estimated in November the legal battle with Anglo could take three to four years to be resolved.
Codelco ... has exercised its right to purchase shares in Anglo American Sur, Codelco told Chile's market regulator in a statement. It said it had exercised its full option to purchase a 49 percent stake.
If necessary, Codelco will exercise all necessary actions to defend and safeguard its legitimate rights and demand the fulfillment of the contract that Anglo American seeks to ignore.
Codelco says it made public its intention to exercise the option months ago. Anglo American has said it was within its right to sell a stake to Mitsubishi, saying Codelco's window to exercise its option only opened this month.
Codelco says Anglo American has reneged on its option contract and has acted in bad faith.
A Chilean court in December maintained a sales freeze on Anglo American's southern Chilean properties, preventing the London-listed miner from selling another part of its coveted assets after Codelco filed an appeal to safeguard them.
Anglo's properties in southern Chile include the flagship expansion project Los Bronces where Anglo has invested around $2.8 billion; the El Soldado mine; the Chagres smelter; and the Los Sulfatos and San Enrique Monolito exploration projects.
Anglo American Sur accounted for 41 percent of Anglo's total copper production in 2010. Analysts have estimated the south Chilean assets make up 17 percent of Anglo American's net asset value -- roughly equivalent to its platinum operations.
(Writing by Simon Gardner; Editing by David Gregorio)