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MeneameThe writ submitted before a Chilean appeals court by London-based Anglo American (LSE: AAL) against state copper producer Codelco is a desperate measure from the multinational company, Codelco's copper workers federation (FTC) president Raimundo Espinoza told BNamericas.
On December 22, Anglo American filed the writ accusing Codelco of alleged breach of contract. The move followed an appeals court ruling the previous day that rejected Anglo American's request to lift an injunction that was granted to Codelco in November. The injunction aims at preventing the UK-based company from selling any further stake in its assets in central Chile.
The writ states that Codelco breached the original option agreement on local subsidiary Anglo American Sur's (AAS) assets, which include the Los Bronces and El Soldado copper mines, and the Chagres smelter.
Codelco is also accused of breaching the procedures set out in the agreement.
"My impression is that this is a desperate move from Anglo American, as it has lost all the legal actions so far," Espinoza said.
"As the legal dispute advances, Anglo American's lawyers will realize the strength of Codelco's legal position to exercise the option to acquire a 49% stake in the assets," the FTC president and Codelco board member said.
Codelco announced its intention to exercise an option to acquire 49% of AAS' assets in October. The option becomes available every three years and the next window of opportunity is in January 2012.
However, less than a month later, Anglo American reported the sale of a 24.5% stake in the assets to Japan's Mitsubishi for US$5.39bn and said that it was evaluating selling further stakes. The transaction was interpreted by Codelco as an attempt to block its right to exercise the option in full.
Anglo American's writ states that the breach of contract consists of Codelco's premature attempt to exercise the option and Codelco's actions aimed at preventing Anglo American from exercising its contractual rights under the option agreement.
Anglo said last week it seeks to declare void the potential future exercise of the option by Codelco and also seeks damages.
Under the option agreement, which dates back to the privatization of the assets over 30 years ago when they were acquired by Exxon (NYSE: XOM), Codelco would pay proportionately less for the 49% than Mitsubishi paid for the 24.5%.
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