Anglo American and Codelco Partner to Enhance Copper Production

Anglo American Plc and Chile's Codelco have inked a strategic agreement to jointly develop adjacent mines near Santiago. This collaboration aims to boost copper production without significant capital investments.

Driven by diminishing ore quality and rising project costs, mining companies globally are forming partnerships to optimize operations and increase output. By pooling resources at the Los Bronces and Andina mines, Anglo and Codelco anticipate an additional 120,000 metric tons of copper annually, generating an estimated value of $5 billion shared equally.

Anglo CEO Duncan Wanblad hailed the deal as a "smart piece of dealmaking." This alliance aligns with Anglo's strategic focus on copper and iron ore after fending off a takeover bid from BHP Group last year. The London-based firm targets an annual copper production exceeding 1 million tons by the early 2030s, a 30% surge. Accessing high-grade ore between Los Bronces and Andina will facilitate this goal.

For Codelco, the partnership with Anglo marks a significant milestone. It will help boost copper output, which fell in 2023 to its lowest level in 25 years due to aging mines and underinvestment. The state behemoth is currently engaged in a record investment program, albeit accompanied by rising debt levels.

Anglo has faced production challenges in Chile due to declining ore grades and stringent permitting processes. However, the industry is witnessing renewed investment momentum following the resolution of tax uncertainties through a new royalty system and burgeoning demand for copper in the energy transition and data center industry.

The operational integration of Andina and Los Bronces necessitates further discussions, due diligence, and permitting. The production ramp-up is not expected to commence until 2030. The agreement allows both companies to pursue separate development projects, including underground initiatives. Notably, the partnership leverages existing processing capacity, minimizing the need for substantial investments.