According to the Chilean state copper producer, the plan will allow copper production to increase without significant additional investment by either company.
Codelco and Anglo American announced the signing of a Memorandum of Understanding (MOU) to work on an alliance that will allow them to enhance the development of the Andina — Los Bronces mining district through the execution of a Joint Mining Plan between 2030 and 2051.
This Plan, Codelco explained, “will allow for increased copper production without substantial additional investments by both companies, increase the contribution to the country in the short and medium term, and strengthen Chile's position as a leading copper supplier worldwide.”
In this way, the state copper company stressed, “greater value will be generated for shareholders – which in the case of Codelco is the State of Chile – workers, suppliers and communities.”
The integration of mining operations is expected to increase pre-tax value generation by at least US$5 billion, not considering potential additional operational synergies.
A fundamental principle is that Codelco's Andina and Anglo American's Los Bronces will retain full ownership of their respective mining concessions, processing plants and tangible assets, the MOU details.
To date, Andina and Los Bronces operate separate, adjacent operations in one of the largest mining districts in the world, representing more than 2% of global copper reserves and resources, a mineral critical to a decarbonized economy.
To address this challenge of geographic adjacency, “both operations have coordinated their work through more than 10 cooperation agreements in 47 years, to achieve efficient and safe work, without operational interference,” Codelco said.
The decision announced to the market today would mean achieving deeper coordination through a Joint Mining Plan, which will create greater value than in separate operations.
ALLIANCE DETAILS
The MOU sets out the fundamental principles of the alliance.
The companies expect to close negotiations and finalize binding agreements by the second half of 2025, subject to obtaining all relevant approvals and completion of the due diligence process.
Once the agreements are signed, it is estimated that it will take at least 5 additional years to obtain the necessary permits to operate under the Joint Mining Plan.
The project will have corporate governance comprised of equal parts Codelco and Anglo American, and together they will form a new operating entity, controlled 50:50, that will execute the Joint Mining Plan and coordinate the use of the combined processing capacity of both operations.
“Each company will continue to extract minerals independently but in a coordinated manner, while processing will be carried out by taking advantage of the synergies of the facilities and capacities of the plants of both companies,” it was detailed.
The resulting copper production, as well as the costs and responsibilities associated with the joint operations, will be shared equally, while marketing will be managed individually by each of the companies.
SOCIO-ENVIRONMENTAL COMMITMENTS
The MOU states that the project will safeguard the current socio-environmental commitments of Andina and Los Bronces. It will also promote the care of high Andean ecosystems and their biodiversity, given the current climate change scenario and its impact on glaciers.
Given the water shortage in the central region, the companies are committed to managing water responsibly and “moving towards not using fresh continental water in mining processes.”
In the social sphere, a relevant issue will be the well-being of communities and relationships in the territory, through a process of “broad, inclusive, informed and transparent” dialogue.
Likewise, the joint operation will maintain safety standards and control of vehicle flows on access routes to the operations.
THE PLAN IN FIGURES
The joint project will increase the district's production by around 120 thousand tons of fine copper on average annually between 2030 and 2051, subject to obtaining the relevant permits.
“This increase would lead to an increase in copper production in Chile, taking 2023 as a base, of 2.8%,” Codelco said.
At the end of this period, the Joint Mining Plan will end.
In the meantime, the agreement allows both companies to maintain the flexibility to develop separate projects, including the development of Andina's underground resources and the underground phase of the Los Bronces Integrated project.
"NEIGHBORS AND PARTNERS"
Codelco Chairman Máximo Pacheco said the state-owned company has been a “neighbor and partner of Anglo American for decades.”
“Today we are faced with a unique opportunity to rethink the development of this mining district, taking a strategic and beneficial step: moving forward in an alliance that will allow it to become one of the three most important copper mining districts in Chile and the fourth in the world,” he said.
Pacheco stressed that with the agreement "we will contribute with a critical mineral for the transition towards a decarbonized economy and we will create greater value of at least US$ 5 billion, which implies significantly increasing our contribution to the Treasury and maintaining Chile as a world leader in copper production."
Anglo American Chief Executive Duncan Wanblad added: “Copper is at the forefront of our growth ambitions, with a clear path to producing more than 1 million tonnes of copper per year by the early 2030s, an increase of 30%.”
He added that Los Bronces and Andina “present clear and significant benefits due to their adjacency, and together they have resources and reserves of approximately 60 million tons of copper, which represents more than 2% of the world's copper reserves and resources.”
