Mitsubishi to help defuse Anglo, Codelco row: sources
LONDON/SANTIAGO (Reuters) - Japanese trading house Mitsubishi Corp could cede part of its stake in coveted Chilean copper properties to solve a bitter row between Anglo American Plc and Codelco, sources said, as the miners sought more time for talks.
Codelco CODEL.UL, the world's largest copper producer, said on Thursday that the parties would seek to extend until mid August a break from litigation that was due to end on July 17, adding that a deal had not yet been clinched.
Sources familiar with the matter said one option on the table would involve Mitsubishi (8058.T) reducing its share in Anglo's (AAL.L) prized Sur properties in south-central Chile, which could give room for Codelco to buy a larger stake in the assets.
"It is possible Mitsubishi could sell some of its stake," one of the sources familiar with the matter said.
A source familiar with Mitsubishi but not directly involved in the Chilean negotiations said the trading house took a long- term view and would be "open to compromise," including giving up part of its stake to ultimately boost Codelco's holding.
"They would (consider it) if this was the key to unlocking the situation," the second source said.
State-owned Codelco, which has been at odds with Anglo since October, declined to comment on possible deals to end the dispute.
"If Mitsubishi was to give up part of its interest, you'd think Mitsubishi wants to profit in some way; it's not a benevolent move," analyst Des Kilalea at RBC Capital said. "The overriding thing is that a solution that is negotiated is positive providing the valuations make sense."
Anglo and Codelco have been at odds since last October over an option to buy a 49 percent stake in AAS.
Codelco said in October it would exercise the option to buy the AAS stake when the option window opened in January this year and secured funding from Japan's Mitsui & Co Ltd (8031.T). But weeks later, Anglo surprised the market and Codelco with the pre-emptive sale of a 24.5 percent stake in AAS to Mitsubishi, in a $5.4 billion (3.5 billion pounds) deal that dented Chilean hopes, but which Anglo said secured better value for investors.
The sources said that among the possibilities being negotiated, Mitsubishi would sell down that 24.5 percent. Even a small stake could potentially prove a face-saving solution for Codelco, which would then have the largest share after Anglo.
"Legal matters can be undone in the same way they are done. There's no legal problem in doing a sell-back," said Inigo de la Maza, a law professor at the Universidad Diego Portales in Santiago. "The problem is more economic. What happens with what was already paid? What happens with the other obligations?"
Several sources said new Codelco Chief Executive Thomas Keller - considered by some analysts to be more amenable to a deal than his predecessor - was in Japan last month for talks, as was Anglo.
Chilean newspaper La Tercera said Mitsubishi could cede 5 percent of its 24.5 percent stake in the asset to make room for Codelco to buy 29.5 percent.
But the sources told Reuters on Thursday that the two sides were still talking, while Codelco dismissed reports on the details of a deal as "journalistic speculation."
Codelco, Mitsubishi and Anglo American all declined to comment on a potential solution involving Mitsubishi.
"Discussions are confidential and ongoing," an Anglo spokesman said.
Anglo's Los Bronces, part of the disputed unit, could at its peak be the world's fifth-biggest copper mine and stands out in a red-metal market defined by a lack of new deposits.
Anglo expects its ramped-up mine to more than double annual copper output from 2010 levels in its first three years of full production, before ebbing on dwindling ore grades. It could produce as much as 490,000 tonnes of copper annually.
A slice of the prized properties would be a major boost for Codelco - which faces dwindling ore grades in its own deposits -as it seeks to boost its annual output to over 2 million tonnes by 2020.
Monetary compensation would also be welcome as Codelco builds up its massive investment plans.
Anglo shares closed 2.21 percent lower on Thursday, outperforming a 2.78 percent fall on the broader FTSE 350 mining index .FTNMX1770.
(Additional reporting by Yuko Inoue. Writing by Clara Ferreira-Marques and Alexandra Ulmer.)
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